Revlon, Inc. announced its results for the third quarter ended September 30, 2012, with net sales of $347 million compared to $337.2 million in the third quarter of 2011, an increase of 2.9%. Excluding unfavorable foreign currency fluctuations of $6.4 million, third quarter 2012 net sales increased 4.8%. Operating income for Q3 2012 was $19.1 million, which included $24.1 million of restructuring and related charges associated with the actions announced on September 5, 2012, and a charge of $2.2 million related to estimated costs of settling previously disclosed litigation related to the company’s 2009 exchange offer, compared to $44.8 million.
The company recorded a net loss of $15 million, or $0.29 per diluted share, which included $24.1 million ($23.1 million after tax) of restructuring and related charges and a charge of $2.2 million, before and after tax, related to the litigation noted above, compared to net income of $0.1 million, or nil per diluted share. Net loss in the third quarter of 2012 included $11.5 million of income tax expense, compared to $22.1 million in the third quarter of 2011.
Commenting on the announcement, Revlon president and CEO Alan T. Ennis, said, “In the third quarter, we continued to execute our strategy of profitably growing our business as we grew net sales by 4.8%, maintained competitive operating income margins, and improved free cash flow. We continue to bring highly innovative, consumer-preferred new products to the marketplace. In the quarter, we also announced actions to drive operating efficiencies, which, once fully implemented, are expected to generate annualized cost reductions of approximately $10 million. These actions are further enabling us to invest in the execution of our strategy while maintaining highly competitive margins.”
For the company’s Q3 2012 increase of $9.8 million, or 2.9%, to $347 million in net sales, the increase was primarily driven by higher net sales of Revlon color cosmetics, as well as the inclusion of the net sales of Pure Ice.
In the U.S., net sales in the third quarter of 2012 were $192 million, an increase of $7.3 million, or 4%, compared to $184.7 million in the same period last year. The increase was primarily driven by higher net sales of Revlon color cosmetics and the inclusion of the net sales of Pure Ice. These increases were partially offset by lower net sales of Almay color cosmetics, Revlon ColorSilk and Mitchum antiperspirant deodorant.
In Asia Pacific, net sales in the third quarter of 2012 were $60.9 million, an increase of $2.9 million, or 5%, compared to $58 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $3.2 million, or 5.5%, primarily due to higher net sales of Revlon color cosmetics in Japan and certain distributor territories, partially offset by lower net sales of Revlon color cosmetics in China.
In Europe, the Middle East and Africa, net sales in the third quarter of 2012 were $43.8 million, a decrease of $7.3 million, or 14.3%, compared to $51.1 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales decreased $2.8 million, or 5.5%, primarily due to a higher returns accrual of $1.6 million associated with the previously announced restructuring and related activities in France and Italy, as well as lower net sales of fragrances in the U.K. and certain distributor territories and lower net sales of Revlon color cosmetics in Italy. These unfavorable impacts were partially offset by higher net sales of Revlon color cosmetics in South Africa.
In Latin America, net sales in the third quarter of 2012 were $30.6 million, an increase of $5 million, or 19.5%, compared to $25.6 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales in Latin America increased $6.3 million, or 24.6%, primarily due to higher net sales in Venezuela. Venezuela’s increase in net sales was primarily due to the absence of sales for a portion of the third quarter of 2011 as a result of the June 5, 2011 fire that destroyed the company’s facility there. Net sales in Venezuela and Argentina also benefited from higher selling prices reflecting market conditions and inflation, which accounted for approximately one-quarter of the $6.3 million net sales increase in the region.
In Canada, net sales in the third quarter of 2012 were $19.7 million, an increase of $1.9 million, or 10.7%, compared to $17.8 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $2.2 million, or 12.4%, primarily due to higher net sales of Revlon color cosmetics.
Net sales in the first nine months of 2012 were $1,034.8 million, an increase of $13.2 million, or 1.3%, compared to net sales of$1,021.6 million in the first nine months of 2011. Excluding unfavorable foreign currency fluctuations of $19.4 million, net sales increased $32.6 million, or 3.2%.
In the United States, net sales increased $14.8 million, or 2.6%, to $580.6 million in the first nine months of 2012, compared to net sales of $565.8 million in the first nine months of 2011, and in Asia Pacific, net sales in the first nine months of 2012 were $172.8 million, an increase of $3.2 million, or 1.9%, compared to $169.6 million in the same period last year. Excluding the favorable impact of foreign currency fluctuations, net sales increased $2.7 million, or 1.6%. In Europe, Middle East and Africa, net sales in the first nine months of 2012 were $134 million, a decrease of $18.8 million, or 12.3%, compared to $152.8 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales decreased $5.4 million, or 3.5%. And in Latin America, net sales in the first nine months of 2012 were $89.2 million, an increase of $10.3 million, or 13.1%, compared to$78.9 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $15.3 million, or 19.4%. In Canada, net sales in the first nine months of 2012 were $58.2 million, an increase of $3.7 million, or 6.8%, compared to $54.5 million in the same period last year. Excluding the unfavorable impact of foreign currency fluctuations, net sales increased $5.2 million, or 9.5%.
Net income in the first nine months of 2012 was $4.6 million, or $0.09 per diluted share, compared to $17 million, or $0.32 per diluted share in the first nine months of 2011. Net income in the first nine months of 2012 included $24.1 million ($23.1 million after tax) of restructuring and related charges and a net charge of $8.9 million, before and after tax, related to the litigation noted above.
More information on Revlon’s Q3 2012 and nine months 2012 results is available here.
