Revlon, Inc.
Q4 2015 Earnings Call Transcript

Published: 26 Feb 2016

[Operator:]

Please standby, we’re about to begin. Good morning ladies and gentlemen, and welcome to the Revlon’s 2015 Earnings Conference Call. At the request of Revlon, today’s conference call is being recorded. If you have any objections you may disconnect at this time. I’d now like to turn the call over to Ms. Siobhan Anderson, Revlon Chief Accounting Officer and Treasurer. You may begin, Ms. Anderson.

[Siobhan Anderson:]

Thank you, Jennifer. Good morning, everyone, and thanks for joining today’s call. Earlier today we released our financial results for the year ended December 31, 2015. If you have not already received a copy of the earnings release, you can obtain one on our website at revloninc.com. On the call with me this morning are Lorenzo Delpani, Revlon’s President and Chief Executive Officer; and Roberto Simon, Executive Vice President and Chief Financial Officer. Before I turn the call over to Lorenzo, I would like to remind everyone of a few things. First, our discussion this morning might include forward-looking statements that are based on our current expectations. Information on factors that could affect our actual results and cause them to differ materially from such forward-looking statements is set forth in our SEC filings, including our 2016 Form 10-K which we filed earlier this morning. We undertake no obligation to publicly update any forward-looking statements except for the company’s ongoing obligations under the U.S. federal securities laws. Next, our remarks today will include a discussion of certain GAAP and non-GAAP measures. The company has identified certain unusual items impacting the comparability of the company’s period over period results. As a result of these unusual items, the definition of adjusted EBITDA has changed from that used in prior periods. The adjusted measures are defined in our earnings release and are also reconciled in the financial tables at the end of the release. Our discussion this morning should not be copied or recorded. And with that, I will turn the call over to Lorenzo.

[Lorenzo Delpani:]

Good morning to all of you and thank you for joining our call today. Overall, 2015 ended with a very successful fourth quarter for both our Consumer and Professional segments. Net sales were $521.9 million in Q4 2015, a growth of 4.2%, or 9.8% on an XFX basis. On a full-year basis, the net sales were $1.91 billion in 2015, a decline of 1.4%, yet a growth of 4.9% on an XFX basis. Adjusted EBITDA was $125.6 million in Q4 2015, a growth of 16.4%, or 21.8% on an XFX basis. On a full-year basis, adjusted EBITDA was $377.5 million in 2015, a growth of 3.4%, or 7% on an XFX basis. As reported, net income was $24.8 million in Q4 2015, including the impact of $37.5 million of non-operating item net of taxes. On a full-year basis, as reported, net income was $56.1 million in 2015, including the impact of $47.3 million of non-operating items, net of taxes. The non-operating item for both periods included a pension lump-sum settlement charge of $20.7 million and a non-cash goodwill impairment charge of $9.7 million, which was $6 million after-taxes. Importantly, excluding these non-operating items, adjusted net income was $61.3 million in Q4 2015, an increase of $56 million, and was $103 million in 2015 total year, an increase of $43 million, or 71.5%. During 2015, the company has reinvigorated its key brands and increased our profitability. At the same time, we successfully integrated the Colomer business into the combined company and reduced our cost structure. The company has built strong momentum. We are in a more competitive position, and we have more resources to invest in our brands. I will now turn the call over to Roberto.

[Roberto Simon:]

Thank you, Lorenzo, and good morning, everyone. We will now review our segment results. In 2015, Consumer segment net sales were $1.41 billion. On an XFX basis, and excluding Venezuela, Consumer net sales increased by 4.4% in 2015. This increase was mainly driven by higher net sales of Revlon color cosmetics, Mitchum, Revlon ColorSilk and Cutex, partially offset by lower net sales of Almay. Consumer segment profit was $360.2 million in 2015. On an XFX basis, and excluding Venezuela, Consumer segment profit increased by 11.1% in 2015. The increase is mainly due to higher gross profit as a result of the increase in net sales, partially offset by $8.7 million of higher brand support for the company’s consumer brands. In the Professional segment, 2015 net sales were $471.1 million. On an XFX basis, Professional segment net sales increased 2.4%. This increase is primarily due to higher net sales of American Crew, Revlon Professional products, and Creme of Nature, partially offset by lower net sales of CND. Professional segment profit was $103.9 million in 2015. On an XFX basis, Professional segment profit increased 2.7%. The increase is mainly due to the increasing gross profit as a result of higher net sales, partially offset by $5.1 million of higher brand support for the company’s professional brands. Affecting the comparison, 2014 included a favorable adjustment of $3.4 million related to a decrease in the inventory obsolescence reserve. Excluding these on an XFX basis, Professional segment profit would have increased by 6.1% in 2015. Moving onto net sales by geography. In 2015, net sales in the U.S. were $1.04 billion, or 2.1% higher than in 2014. U.S. net sales increased $33.4 million in the Consumer segment, primarily driven by higher net sales, or Revlon color cosmetics, Mitchum and Revlon ColorSilk, partially offset by lower net sales of Almay. U.S. net sales decreased $11.6 million in the Professional segment, primarily due to lower net sales of CND nail products. Moving onto international results. In 2015, international net sales were $870.6 million. On an XFX basis, net sales were up 7.9%. International net sales increased $20.6 million in the Consumer segment, primarily due to higher net sales of Revlon color cosmetics and Mitchum. International net sales also increased $23.7 million in the professional segment, primarily due to higher net sales of American Crew and Revlon Professional. From a geographical perspective, the increase in the Consumer and Professional segment was throughout most of the company’s international region. Additionally, the other segment had net sales of $28.4 million in 2015, with no comparable net sales in 2014. Excluding Venezuela, international net sales increased 9% on an XFX basis. Moving to total company results. On an XFX basis, adjusted EBITDA increased $25.4 million, or 7%. This increase was primarily due to higher gross profit in both the Consumer and Professional segment, partially offset by $16.2 million of higher brand super [ph] expenses, as well as higher general and administrative expenses. Driving the increase in general and administrative expenses was $14.7 million of severance costs. Adjusted net income increased $43.1 million, or 71.5%. This increase was primarily due to the growth in adjusted EBITDA, as well as a $24.2 million decrease in the provision for income taxes in 2015. The income tax provision decrease is mainly due to a net reduction of our valuation allowance in certain foreign jurisdictions in 2015, compared to the establishment of such valuation allowance in 2014. Taking a look at liquidity, as of December 31, 2015, our unutilized borrowing capacity and cash on hand was $473.6 million. This was made up of available cash of $307.4 million, unavailable borrowing on our revolver of $166.2 million. Now, I will turn the call back over to Lorenzo.

[Lorenzo Delpani:]

Thank you, Roberto. As a final remark, I also want to announce that I have informed the Board of my intention to step down as President and CEO, effective March 1. I do these for personal reasons. It has been a pleasure and a privilege to leave this extraordinary company during a period of transformation and growth. It has been my mission to continue Revlon industry leading commitment to quality and innovation, and it is the Revlon team’s relentless drive toward those goals that has paved the way for our current and future success. I want also to thank all my good friends and colleagues at Revlon and MacAndrews & Forbes for their hard work and support and believe that to be staying on with organization as a member of Revlon Board and as an Advisor. I also want to congratulate my good friend Gianni Pieraccioni on his well-deserved promotion to Revlon’s Chief Operating Officer. I look forward to continuing my partnership with Revlon to grow the company. I will now turn over the call to Siobhan.

[Siobhan Anderson:]

Thank you, Lorenzo. This concludes our prepared remarks. And we would now like to open up the call for your questions. Operator, please prompt the participants for questions.

[Operator:]

[Operator Instructions] And we will go first to Kevin Ziets with Citigroup.

[Kevin Ziets:]

Hi, thanks for taking my questions. I guess I wanted to off by wishing Lorenzo good luck and congratulations on all that you’ve achieved in the years that you are at Revlon.

[Lorenzo Delpani:]

Thank you.

[Kevin Ziets:]

Of course, I guess along those lines I was curious if there are, what are the plans to fill the CEO position at this point? And will you be assisting in that effort? And whether you could say, if there is anything related to the MacAndrews & Forbes filing regarding its foreign strategic options that maybe prompted this decision?

[Lorenzo Delpani:]

Okay. So I’m going to start breaking down into. First of all, I’m leaving for personal reasons and it has nothing to do with the announcement the MacAndrews & Forbes has made. And essentially I’ve been working, in a workaholic fashion since I started, when I was 21, nonstop. I’ve gone through a very intense turnaround in The Colomer Group and then moved on integrating the company here. And we have done a successful job of both integrating and rebuilding momentum at Revlon. And I think I’ve completed this cycle, and I want to take a break, and focus on myself and my family, and essentially engage new challenges in the future; that’s the reason why I’m leaving. Now, as far as concerned the new CEO, the company expects to have an announcement soon, and that’s basically where we stand.

[Kevin Ziets:]

Okay. Can you talk about the process at all in terms of the strategic fixed points to your options and what kinds of things are being evaluated?

[Lorenzo Delpani:]

We don’t comment on an announcement that we have not made, and if you would have add anything material to release, we would have. And there’s nothing material that Revlon needs to release at this stage. And the announcement is a MacAndrews announcement and we won’t comment on that.

[Kevin Ziets:]

Okay fair enough. Just diving into the business, I noticed in the fourth quarter international sales were up quite significantly. Is there something regarding timing, product launch or maybe distribution gains that you could speak to that maybe driving that?

[Lorenzo Delpani:]

Yes, so the question reflex a little bit of the misperception that is probably out there in the market; that we are kind of, it said that we are flat in sales. And indeed on as reported basis, the company has been kind of flattish in the past quarters. But on a XFX, we have been growing quarter after quarter for a quite some time now, and you can go and track it back in the older announcement. We have a stronger, we build strong momentum, thanks to strategy value creation, mainly we have increased prices, we have increased margins and increased margin also for cost of goods improvement, and then we obtained more resources which we reinvested back into the business. In fact, the brand support levels that which we support the business now are competitive, we deem them to be competitive that was not the case in 2013, in 2013 they weren’t sufficient; they had strategy value creation, created resources that we invested in the brand. Investing behind our brands, we have a focus strategy behind fuel bigger innovation as you did improvement in the results. And that’s we have a good results, I would say around, it is difficult to give a number in specifics, but approximately 80% of our business unit are clearly up. And some are double digit versus the past, thanks to this renewed investment and focus. So what is driving that; in the Consumer business it’s driven by these are let’s say essentially investment increase and investment focus, because it’s not just increase, the fact that we have a launched less innovation and yet yielded more sales, that may sound counterintuitive, but I want to clarify that’s the reason of the fewer bigger strategies that we were launching. So many things that was difficult to focus on any of them. So we select our bet, we focus on that on fewer initiatives and by doing so, we get better results. So that’s essentially what driving the Consumer business. As far as concern the Professional in 2015 on a like-for-like basis, okay, excluding the XFX impact. If this would be a company reporting in euro, we wouldn’t have this strange misperception and storytelling. So on a like-for-like basis, the Professional business has done its best year ever internationally, because Revlon Professional has built a strong momentum behind the launch of successful innovation like [indiscernible] color and American Crew has also posted double-digit growth internationally. It’s due to increased investment and a sharper positioning. Now to complete the picture, also CND internationally has performed well. Even if domestically, CND has struggled to bit in the value market. So all in all, and I know it sounds like a long story. And – but all in all, the bottom line is on a like-for-like basis, we have done – we have posted very, very significant growth and that’s not the first quarter we do so, has been a while. Unfortunately, we faced FX impact that was totally unprecedented and totally significant. And that has basically also offset the perception we talked about.

[Kevin Ziets:]

I appreciate all that color.

[Lorenzo Delpani:]

For example this year, the net sales FX impact is $121 million. So you can appreciate that if we’re substantially flat, but we have offset $121 million of FX impact. And in EBITDA, we are actually growing that the underlining fundamentals of the company are very solid.

[Kevin Ziets:]

Absolutely, and I appreciate all that color. I was – I should have been clearer and just saying that I was – the fourth quarter, excluding FX international sales grew 20%, and that seemed to be a little bit higher. And maybe I can ask the question a little bit differently. Do you think that your sell-through rates are consistent with the level of sales that you’ve reported on a XFX basis, or is there any kind of timing between your distributions and what’s happening at the point-of-sale?

[Lorenzo Delpani:]

No, there’s no – there’s absolutely nothing to report in the sense. In that sense, I want to address indirectly. It seems like you are asking, if there has been any sort of loading practices. Loading is forbidden in our operational practices. We actually punish it and if someone does loading, we actually fire them. And we built business and for us business is a lot and so lean, and I’m very comfortable that there’s not been any distribution or trade loading of any sort.

[Kevin Ziets:]

I wasn’t suggesting that I was just curious, if there was any like product launch driven types of timing differences, not any loading issues?

[Lorenzo Delpani:]

The only thing that – it’s a small detail, but for the sake of transparency that we need to call out but easy material is in Australia, because we launched the SAP rollout. We have anticipated a little bit of sales of approximately amount of sale. But that’s just Australia and it’s very minor.

[Kevin Ziets:]

I appreciate that. If I could ask one last question, it sounded like you were comfortable with the level of advertising and brand support going forward, that it would be roughly equal to 2015 levels. Is there any timing on that? I seem to recall the first-half of this year being a little bit heavier than the second-half on a year-over-year basis, just didn’t know if there was anything timing wise we should expect in terms of 2016?

[Lorenzo Delpani:]

All right. So, basically, let’s say that our level of investment is now deemed to be competitive and we are going to be more or less in line with last year. As far as timing, I don’t want to disclose that, because it’s competitive – sensitive for competitive reason.

[Kevin Ziets:]

Okay. And a very last housekeeping item is just, do you have the restrictive payments capacity limitations handy with regards to either the bank debt or the bonds, if not, I can follow up?

[Siobhan Anderson:]

Yes, we can follow up.

[Lorenzo Delpani:]

We can follow up.

[Kevin Ziets:]

Okay. Thank you, guys. Good luck.

[Lorenzo Delpani:]

Thank you.

[Operator:]

Thank you. And we’ll go next to Grant Jordan from Wells Fargo.

[Grant Jordan:]

Great. Thanks for taking the questions. Also I’d like to say job well done, as you’re leaving Lorenzo. And I just wanted to follow-up a little bit around Kevin’s question on the international sales that’s been growing all year, but particular strength here in the fourth quarter at almost 20%, was that mainly taking share with an existing markets? Or did you have new distribution or new geographies you wanted to?

[Lorenzo Delpani:]

Okay. So on a broad stroke basis, I would say, we need to separate the story between Consumer and Pro. So on Consumer, I would say generally we’ve been taking share, but as well as expanded distribution. So your question is, we have done both. And in some cases, we have by expanding distribution, we expanded share. So for example in Japan and Korea, we have expanded distribution, hence business and share. So part of the strategy value creation fillers, they rollout of our categories in all the geographies, and last year we have a initiative the rollout for example of ColorSilk, it’s our hair color business and we launched it in various markets and it had very, very encouraging results. And as well as reinvigorating as I mentioned before the support between our core category color cosmetics, which has gone from let’s say being a little bit under invested to being properly invested and these has generated consumption pickup. So and also worth mentioning another dimension, we have a group, they distribute our management business, behind one person and not by regional way. We centralized it, and also our distributor business is because we now focus the business on building the sellout and not building the selling, is being reactivated with a plan and investment and is showing very good momentum. So that’s for consumer. And as far as consumption pro., and Revlon Professional, I would say it’s essentially driven by innovation that work that we have done some very important re-launches, like the re-launch of Revlonissimo hair color that has been very successful and American Crew by marketing plans and marketing focus and distribution also as function and CND has performed a bit better because of the investment levels at least internationally. So you can appreciate that we did focus a lot on the international market, hence with tireless trips and travels, and the reason is because we add that to offset the FX. And as I mentioned before and just to give you some perspective, in 2003 when I started, the euro is down 20%, the Canadian dollar 22%, Australian dollar 20%, South African 30%, Mexican Peso 20%, Argentine Peso 40% plus, I mean these are approximate numbers, okay. But since we bought Colomer, since Revlon integrated with Colomer, the footprint was no longer a U.S. footprint. Revlon was already international, but it became even more global, and therefore unfortunately more exposed to the FX impact. And I would love that to be like some other French company reporting in Euro, so that we wouldn’t have this misperception out there, because instead of headwinds, we would have add tailwinds in a very big way. But nevertheless, we created our own tailwinds, creating momentum for the business and therefore offsetting largely offsetting in sales not completely, but largely offsetting these headwinds, and in the process improving the fundamentals of our brands, of our business and we improved also our profitability. So the headwinds could have caused also the client profitability instead, there our work has been able to more than offset that. And that’s why we are more profitable.

[Grant Jordan:]

Okay, that’s helpful, and certainly the FX has been a very high hurdle for a number of years. Obviously, we don’t know which way currencies are going to go this year. But based on current rates, do you expect FX to be a headwind for Revlon in 2016?

[Roberto Simon:]

So, as you know, without this being a forward-looking statement, because I don’t control the FX.

[Grant Jordan:]

Okay.

[Roberto Simon:]

If we would control the FX, we would have another job. And without doing that we expect at this rate, if the current rate remains the same, the headwind to be minor, very, very minor. So maybe in the range of a little bit in Q1 and half of Q2 max, but we deemed it to be minor, okay? And, yes, that’s basically – the problem is that the volatility of the exchange rate is significant and we can’t really bank it.

[Grant Jordan:]

Yes, no question, okay. My last question it was a very helpful response. But can you help us think through the gross margin rate change in Q4? It was down 300 basis points. Like your commentary indicated that gross profit was up, XFX for both. If you could just tell us how much FX hurt the gross margin rate in Q4? That would be helpful to think through that.

[Lorenzo Delpani:]

Yes, one second.

[Roberto Simon:]

…impacts in the…

[Lorenzo Delpani:]

Okay. Go ahead.

[Roberto Simon:]

Yes, we have two impacts in the quarter. One is the gross to net activity that during the first and nine months of the year was much lower than in 2014 and in the Q4, we had a significant increase in the gross to net allowances. It was just a timing issue. And the second one, as I commented FX transactions that have impacted in the Q4 significantly those are the two main drivers.

[Grant Jordan:]

Okay. So just so I can make sure I understand that the gross to net..

[Roberto Simon:]

Yes.

[Grant Jordan:]

…you’re saying that the true-up through the first three quarters was underestimated? And so the fourth quarter, there was a catch-up for the…?

[Roberto Simon:]

No.

[Grant Jordan:]

Okay.

[Roberto Simon:]

The timing of the activities on the gross to net activities on the trade in the Consumer business were lower in – than 2014 during the first three quarters of this year, and in the Q4 2015 were higher than last year. So a matter of activity at trade level.

[Lorenzo Delpani:]

To give you some color. We launched last year in quarter four 2015, we have launched “The Love Is On” campaign. So we focused a quite a bit resources in brand support and we were a bit, I guess, lower than usual in gross to net support, which is trade activity, FSI, coupons and the likes. And this year instead, we had lower level of brand support below the line and then higher level of growth to net. And that is because we among other things, we ‘re being promotionally more active during the holiday period. We have special kits and gifts that as a business that, as you probably know, if you don’t I’ll give you some color. The beauty category in general becomes a very, very seasonal and during – there’s a period of four or five weeks, where it almost doubled. And so in general, the beauty category in the holiday period. And traditionally, we were not very active and this year we’ve been active and we’ve been active. And that’s also one of the reason we gained a share during this period and we have now reasonably good share momentum.

[Grant Jordan:]

Great. Okay, yes, that piece of information is very helpful, as we think about the margins. Thank you.

[Lorenzo Delpani:]

But there was also a transactional impact on cost. We have to make almost $3 million of FX.

[Siobhan Anderson:]

In the quarter

[Roberto Simon:]

In the quarter almost $3 million

[Lorenzo Delpani:]

And almost $12 million of gross to net activity.

[Grant Jordan:]

Okay. Great. Thank you.

[Operator:]

[Operator Instructions] And we will go next to Carla Casella from JPMorgan.

[Carla Casella:]

Hi, most of my questions have been answered. But did you say, we should look for permanent display is planning [ph] to say similar to this year, in the year ahead, or how are you looking at spending behind the brands, either between permanent display versus consumer advertising?

[Lorenzo Delpani:]

So we expect the investment, brand support and in display to be compatible with the one that we had this year. And that is an expectation to make this statement. In reality also we are trying to become more efficient. So what we would like to do as a company is to create a semi, but spending less. And, in fact, we have projects in place to become more efficient especially on the permanent display. You asked permanent display there – a lot of that – it comes from procuring them and from third parties. So we have projects in place to – we actually recruited even a specific person on that. So that easily we create the same in market pressure, but hopefully, we’ll save some money. But that’s more a qualitative indication on a quantitative indication, I’ll say to you that that would be compatible, because that’s a cat, that does not been skinned yet. And I didn’t mean to imply that we normally skin cats here, but hopefully we said I would get a pass for it, because…

[Carla Casella:]

Okay, that’s great. And are you seeing much competition on that front. Are your competitors changing the way they support brand either between permanent display spending or consumer advertising printer media?

[Lorenzo Delpani:]

There’s nothing material really to report on this front right now. It would be too long of an answer. And I would need to go into details for our competitors and I don’t – and we don’t do that.

[Carla Casella:]

Okay, great. Thank you.

[Operator:]

Thank you. And we’ll go next Arthur Roulac from Three Court.

[Arthur Roulac:]

Hi, good morning, and congratulations on some fine work this year, gentlemen. My first question is an easy one in the third quarter Q you guys called out sort of a new restructuring plan and I was wondering what the potential cost savings from that restructuring plan might be in 2016?

[Lorenzo Delpani:]

So internally we refer to this project as a post global efficiency, which was launched as [indiscernible] referred in Q3 2015, and we continue through the end of 2017. The project is aimed to – at reducing headcount across several markets in an effort to drive organizational efficiencies. We expect a total of approximately $10 million in one time cost, and we expect to achieve a total of approximately $10 million to $15 million core reduction fully implemented by the end of 2018.

[Arthur Roulac:]

Got it. And in the release you called out, I guess in the fourth quarter there was higher cash compensation expense year-over-year. Can you say what that was just from a comparability perspective for us?

[Lorenzo Delpani:]

Can you repeat the question please?

[Arthur Roulac:]

Sure. I think in the press release I was reading out today that the cash compensation expense was higher, I guess, you were accruing for maybe more management bonuses in the fourth quarter of this year versus last year’s fourth quarter, and I was wondering how much higher that was so we can have some comparability?

[Lorenzo Delpani:]

It’s just a pure timing. In 2014, we had a higher increase on the bonuses in the Q3 of 2014, and this year it happened in the Q4 2015. So it’s purely a timing issue comparing Q4 last year with Q4 this year. I need to say immaterial it’s an immaterial amount.

[Arthur Roulac:]

Got it. And then I know I think you called out severance expense being higher in the fourth quarter and I know that’s not added back to EBITDA. And I believe there was fairly significant severance expense for the entire year of 2015. Can you let us know how much cash severance expense there was that sort of wasn’t added back to EBITDA in 2015?

[Lorenzo Delpani:]

Yes, it was significant and it was $14.7 million. Now you can appreciate that every company has a number of people that is somewhat physiological, and there’s always severance, okay? And but this year in 2015, we started early on in the year executing what we call Renova project, Renova. And that Renova means an upgrade of talent. So we’ve gone starting from the top, two layers down and trying to replace underperformer with better performers. And this exercise has been systematic in across all geography, all functions, and is led to an incremental $14.7 million of severances. That – at this stage, I cannot make a statement for $16, especially in light of the management changes that are coming, you never know what the new position will be taken by new management. But as far as we’re concerned with the existing visibility, we can say that that amount was unusual and possibly nonrecurring. I said that you appreciate that I’m not making a forward-looking statement, because things can change with the new management. So the $14.7 million has impacted our – as reported results, and it’s one of those unusual item that we correct when we talked adjusted EBITDA. It’s not you’re typically restructuring. It’s not that you’re typically restructuring, because you’re typically restructuring drives a saving and this doesn’t drive the savings. It’s just a cost. It’s just a cost and payback is an upgraded talent pool. So you want to say something, Roberto?

[Roberto Simon:]

No, it’s fine.

[Lorenzo Delpani:]

Okay.

[Arthur Roulac:]

And then my next final question was the – I guess the pension you bought some people out, and I haven’t had a chance to look at your 10-K that just came out. But how much is that, I mean, do you see, I guess, as pension costs going forward?

[Lorenzo Delpani:]

It doesn’t have any impact on the cash pension payment going forward.

[Arthur Roulac:]

Yes. And then obviously, I guess, there’s going to be some sort of announcement coming up, there’s a lot of moving parts, but obviously the company, Lorenzo, you’ve done a great job, say, congratulations. Sorry to see you go and then CFO is moving on as well, you have a COO running the business. I guess, the idea is that some point fairly soon, there’s going to be some sort of announcement with regard to what’s going on in the suite of the company?

[Lorenzo Delpani:]

Yes, okay. As I mentioned before and we expect to have an announcement soon on the COO. And subsequently, the search of the CFO as well in advanced stage and we’ve identified several candidates, which I believe that now will be assessed by the new management. So all in all without giving a specific data, I believe that real soon and I say soon address these announcements. And in the meanwhile, the organization is ewll covered. We have a Gianni, which is an extremely capable and talented manager running all the operation. Siobhan leading all the accounting and finance at interim plus a very, very strong financial controller we have for the Professional and Consumer division. And this is the method of the soon, okay? I don’t want to make a specific statement, because I don’t control it. So we realized that the timing is a little bit what it is, but we think that this matter will be addressed shortly, and therefore, I wouldn’t see that as a concern.

[Arthur Roulac:]

Thank you.

[Operator:]

There are no further questions at this time. I’ll turn it back over to our speakers for any additional or closing remarks.

[Lorenzo Delpani:]

Okay. So thanks for the question. And with this, we conclude our call today. Thanks a lot.

[Operator:]

That does conclude today’s conference. Thank you for your participation.