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Investor Relations: Press Release
| Elizabeth Arden, Inc. Announces Third Quarter Fiscal 2011 Results |
NEW YORK, NY, Apr 28, 2011 (MARKETWIRE via COMTEX) -- Elizabeth Arden, Inc. (NASDAQ: RDEN), a global prestige beauty products company, today announced financial results for its third fiscal quarter ended March 31, 2011. THIRD QUARTER RESULTS For the quarter ended March 31, 2011, the Company reported net sales of $231.3 million, an increase of 6.6%, as compared to the third quarter of the prior fiscal year. Excluding the favorable impact of foreign currency translation, net sales increased by 5.5%. Net loss per diluted share for the quarter ended March 31, 2011 was $0.12, as compared to a net loss per diluted share of $0.14 for the prior year period. Excluding debt extinguishment charges associated with the Company's debt refinancing completed in the third fiscal quarter, net income per diluted share was $0.02. For the prior year period, excluding restructuring expenses and expenses associated with the Company's Global Efficiency Re-engineering initiative, the net loss per diluted share was $0.11. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes at the end of this press release. E. Scott Beattie, Chairman, President and Chief Executive Officer of Elizabeth Arden, Inc., commented, "We are encouraged by the broad based revenue growth in North America this quarter. Net sales of our North American business increased by 8% and are up 4% year-to-date. Sales results this quarter were bolstered by solid sales gains across our mass retail, direct-to-consumer and U.S. department store businesses. Net sales of our international business grew by 4% for the quarter and by 9% year-to-date. The sales growth this quarter largely reflects timing of innovation and the relatively modest nature of our third fiscal quarter in general. We continue to see strong momentum in our international business, and most of our markets are experiencing healthy retail sales performance." Mr. Beattie continued, "We also continued to execute against our Global Efficiency Re-Engineering initiatives and delivered another quarter of improvement in our key operating metrics. For the quarter, gross margins increased by 260 basis points and EBITDA (adjusted) margins grew by 210 basis points on a year-over-year basis." During the third fiscal quarter, the Company refinanced its long-term bonds and amended and extended its bank credit facility. Through this refinancing, the Company extended the maturity of its debt structure and added additional long-term capital with minimal impact to the Company's borrowing costs. The Company incurred a pre-tax charge of $6.5 million during the quarter related to this refinancing. NINE MONTHS RESULTS For the nine months ended March 31, 2011, the Company reported net sales of $921.8 million, an increase of 5.3%, or an increase of 5.4% excluding the unfavorable impact of foreign currency, as compared to the prior year period. Net income per diluted share was $1.24, as compared to $0.60 for the prior year period. Excluding debt extinguishment charges and restructuring costs and expenses associated with the Company's Global Efficiency Re-engineering initiative, net income per diluted share for the nine months ended March 31, 2011 was $1.39. For the prior year period, excluding restructuring expenses and expenses associated with the Company's Global Efficiency Re-engineering initiative, net income per diluted share was $0.74. OUTLOOK The Company affirms its prior annual net sales and earnings guidance for fiscal 2011 and anticipates a net sales increase of 5.0% to 6.0%, as compared to the prior fiscal year, and earnings to be in the range of $1.40 to $1.50 per diluted share. The Company expects the gross margin increase for fiscal 2011 over fiscal 2010 to be at the high end of its guidance range of 225 to 250 basis points, and cash flow from operations for fiscal 2011 to be between $75 million and $80 million. The Company will introduce fiscal 2012 guidance in August 2011 when it reports its fourth quarter and fiscal 2011 financial results. The guidance assumes March 2011 foreign currency rates and excludes restructuring costs and expenses associated with the Company's Global Efficiency Re-engineering initiative and $6.5 million in charges related to the refinancing of its bank credit facility and its 7 3/4% senior subordinated notes in the third fiscal quarter of 2011. The Company notes that continued global economic uncertainty may have a negative effect on retailer and consumer confidence and demand, and, along with the foreign currency volatility, makes forecasting difficult. The Company believes that net sales and earnings guidance, excluding the impact of foreign currency translation beyond assumed rates, and restructuring costs and expenses associated with the Company's Global Efficiency Re-engineering initiative and debt refinancing, facilitates period to period comparisons of the Company's operating and financial performance on a consistent basis. CONFERENCE CALL INFORMATION The Company will host a conference call today at 10:00 a.m. Eastern Time. All interested parties can listen to a live web cast of the Company's conference call by visiting the Investor Relations section on the Company's web site at http://www.elizabetharden.com. An online archive of the broadcast will be available within one hour of the completion of the call and will be accessible on the Company's web site until May 28, 2011. Elizabeth Arden is a global prestige beauty products company with an extensive portfolio of prestige beauty brands sold in over 100 countries. The company's brand portfolio includes Elizabeth Arden skincare, color, and fragrance products, PREVAGE(R) anti-aging formulas, the celebrity fragrance brands of Britney Spears, Elizabeth Taylor, Mariah Carey, Taylor Swift, and Usher; the designer fragrance brands of Juicy Couture, Alberta Ferretti, Alfred Sung, Badgley Mischka, Bob Mackie, Geoffrey Beene, Halston, John Varvatos, Kate Spade, Lucky Brand, and Rocawear; and the lifestyle fragrance brands Curve, Giorgio Beverly Hills, and PS Fine Cologne.
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(Unaudited)
(In thousands, except percentages and per share data)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
March 31, March 31, March 31, March 31,
2011 2010 2011 2010
Net Sales $ 231,296 $ 217,026 $ 921,750 $ 875,535
Cost of Goods Sold:
Cost of Sales 115,597 113,885 481,934 479,988
Depreciation
Related to Cost
of Goods Sold 1,224 1,330 3,714 3,791
------------ ------------ ------------ ------------
Total Cost of
Goods Sold 116,821 115,215 485,648 483,779
Gross Profit 114,475 101,811 436,102 391,756
Gross Profit
Percentage 49.5% 46.9% 47.3% 44.7%
Selling, General
and Administrative
Expenses 102,915 97,127 349,354 333,108
Depreciation and
Amortization 6,044 5,707 18,593 17,519
------------ ------------ ------------ ------------
Total Operating
Expenses 108,959 102,834 367,947 350,627
Interest Expense,
Net 5,434 5,271 16,317 16,686
Debt Extinguishment
Charges 6,468 -- 6,468 --
(Loss) Income
Before Income
Taxes (6,386) (6,294) 45,370 24,443
(Benefit from)
Provision for
Income Taxes (3,135) (2,438) 9,776 7,203
------------ ------------ ------------ ------------
Net (Loss) Income $ (3,251) $ (3,856) $ 35,594 $ 17,240
============ ============ ============ ============
As reported:
Net (Loss) Income
Per Basic Share $ (0.12) $ (0.14) $ 1.29 $ 0.61
Net (Loss) Income
Per Diluted
Share $ (0.12) $ (0.14) $ 1.24 $ 0.60
Basic Shares 28,130 28,026 27,543 28,034
Diluted Shares 28,130 28,026 28,666 28,688
EBITDA (a) $ 6,316 $ 6,014 $ 83,994 $ 62,439
EBITDA margin (a) 2.7% 2.8% 9.1% 7.1%
Adjusted to exclude
debt extinguishment,
restructuring
costs and expenses
associated with
the Global
Efficiency
Re-engineering
initiative, net of
taxes (b)(c):
Net Income (Loss) $ 580 $ (3,070) $ 39,795 $ 21,279
Net Income (Loss)
Per Basic Share $ 0.02 $ (0.11) $ 1.44 $ 0.76
Net Income (Loss)
Per Diluted
Share $ 0.02 $ (0.11) $ 1.39 $ 0.74
EBITDA (a) $ 12,784 $ 7,275 $ 91,078 $ 67,687
EBITDA margin (a) 5.5% 3.4% 9.9% 7.7%
(a) EBITDA is defined as net income (loss) plus the provision for income taxes plus interest expense, plus depreciation and amortization. EBITDA should not be considered as an alternative to income (loss) from operations or net income (loss) (as determined in accordance with generally accepted accounting principles (GAAP)) as a measure of our operating performance or to net cash provided by operating, investing and financing activities (as determined in accordance with GAAP) or as a measure of our ability to meet cash needs. We believe that EBITDA is a measure commonly reported and widely used by investors and other interested parties as a measure of a company's operating performance and debt servicing ability because it assists in comparing performance on a consistent basis without regard to capital structure, depreciation and amortization or non-operating factors (such as historical cost). Accordingly, as a result of our capital structure, we believe EBITDA is a relevant measure. This information has been disclosed here to permit a more complete comparative analysis of our operating performance relative to other companies and of our debt servicing ability. EBITDA may not, however, be comparable in all instances to other similar types of measures. We have also disclosed EBITDA as adjusted to reflect the effect of debt extinguishment, restructuring and software implementation costs related to our Global Efficiency Re-engineering initiative and other restructuring costs. This disclosure is being provided for comparability purposes because we believe it is meaningful to our inventors and other interested parties to understand the EBITDA performance of the Company on a consistent basis without regard to the effect of restructuring and other expenses. EBITDA margin represents EBITDA divided by Net Sales. The table below reconciles net income (loss), as determined in accordance with GAAP, to EBITDA and to EBITDA as adjusted: (For a reconciliation of net income (loss) to EBITDA for prior periods, see the Company's filings with the Securities and Exchange Commission which can be found on the Company's website at www.elizabetharden.com.)
(In thousands) Three Months Ended Nine Months Ended
----------------------- ---------------------
March 31, March 31, March 31, March 31,
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net (loss) income $ (3,251) $ (3,856) $ 35,594 $ 17,240
Plus:
(Benefit from) provision
for income taxes (3,135) (2,438) 9,776 7,203
Interest expense, net 5,434 5,271 16,317 16,686
Depreciation related to
cost of goods sold 1,224 1,330 3,714 3,791
Depreciation and
amortization 6,044 5,707 18,593 17,519
---------- ---------- ---------- ----------
EBITDA 6,316 6,014 83,994 62,439
Debt extinguishment,
restructuring and other
expenses (c) 6,468 1,261 7,084 5,248
---------- ---------- ---------- ----------
EBITDA as adjusted $ 12,784 $ 7,275 $ 91,078 $ 67,687
========== ========== ========== ==========
(b) The table below reconciles the calculation of (i) net income (loss) and (ii) net income (loss) per share on a basic and diluted basis from the amounts reported in accordance with GAAP to such amounts before giving effect to debt extinguishment, restructuring and Global Efficiency Re-engineering expenses. This disclosure is being provided for comparability purposes because we believe it is meaningful to our investors and other interested parties to understand the Company's operating performance on a consistent basis without regard to the effect of debt extinguishment, restructuring and Global Efficiency Re-engineering expenses. The presentation in the table below of the non-GAAP information titled "Net income (loss) as adjusted" and "Net income (loss) per basic and diluted share as adjusted" is not meant to be considered in isolation or as a substitute for net income (loss) or net income (loss) per basic and diluted share prepared in accordance with GAAP.
(In thousands, except per
share data) Three Months Ended Nine Months Ended
---------------------- --------------------
March 31, March 31, March 31, March 31,
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net Income (Loss):
Net (loss) income as
reported $ (3,251) $ (3,856) $ 35,594 $ 17,240
Debt extinguishment,
restructuring and other
expenses, net of
tax (c) (d) 3,831 786 4,201 4,039
---------- ---------- ---------- ----------
Net income (loss) as
adjusted $ 580 $ (3,070) $ 39,795 $ 21,279
========== ========== ========== ==========
Net Income (Loss) Per Basic
Share:
Net (loss) income per
basic share as reported $ (0.12) $ (0.14) $ 1.29 $ 0.61
Debt extinguishment,
restructuring and other
expenses, net of
tax (c) (d) 0.14 0.03 0.15 0.15
---------- ---------- ---------- ----------
Net income (loss) per
basic as adjusted $ 0.02 $ (0.11) $ 1.44 $ 0.76
========== ========== ========== ==========
Net Income (Loss) Per
Diluted Share:
Net (loss) income per
diluted share as
reported $ (0.12) $ (0.14) $ 1.24 $ 0.60
Debt extinguishment,
restructuring and other
expenses, net of
tax (c) (d) 0.14 0.03 0.15 0.14
---------- ---------- ---------- ----------
Net income (loss) per
diluted share as
adjusted $ 0.02 $ (0.11) $ 1.39 $ 0.74
========== ========== ========== ==========
(c) For the three months ended March 31, 2011, includes $6.5 million of debt extinguishment costs. For the nine months ended March 31, 2011, includes $6.5 million of debt extinguishment costs, $0.3 million related to the implementation of our Oracle accounting and order processing systems, and $0.3 million of restructuring expenses related to our Global Efficiency Re-engineering initiative. For the three months ended March 31, 2010, includes $0.9 million related to the implementation of our Oracle accounting and order processing systems and $0.3 million of restructuring expenses not related to our Global Efficiency Re-engineering initiative. For the nine months ended March 31, 2010, includes $2.5 million related to the implementation of our Oracle accounting and order processing systems, $2.0 million of restructuring expenses related to our Global Efficiency Re-engineering initiative and $0.7 million of restructuring expenses not related to our Global Efficiency Re-engineering initiative. (d) On a reported basis, for the three and nine months ended March 31, 2011, our effective tax rate, which is calculated as a percentage of loss or income before income taxes, was 49.1% and 21.6%, respectively. On an adjusted basis, for the three and nine months ended March 31, 2011, our effective tax rate was 601.0% and 24.1%, respectively. On a reported basis, for the three and nine months ended March 31, 2010, our effective tax rate was 38.7% and 29.5%, respectively. On an adjusted basis, for the three and nine months ended March 31, 2010, our effective tax rate was 39.0% and 28.3%, respectively. SEGMENT NET SALES Commencing July 1, 2010, our operations and management reporting structure were reorganized into two reportable segments, North America and International. The portion of our business operations that previously sold Elizabeth Arden fragrance, cosmetic and skin care products in prestige department stores in the United States and through the Red Door beauty salons, which was previously reported as part of our Other segment, has been consolidated with the North America Fragrance segment to create the North America segment. The table below is a summary of our net sales by reportable segment for the three and nine months ended March 31, 2011 and 2010.
% %
Three Months Increase Nine Months Increase
(In thousands) Ended (Decrease) Ended (Decrease)
----------------- ---------- ------------------- ---------
Constant Constant
March 31, March 31, Rates March 31, March 31, Rates
2011 2010 GAAP (e) 2011 2010 GAAP (e)
-------- -------- ---- ---- --------- --------- ---- ---
Segment Net
Sales
North
America $142,755 $131,641 8.4% 7.9% $607,854 $586,772 3.6% 3.3%
International 88,541 85,385 3.7% 2.1% 313,896 288,763 8.7% 9.8%
-------- -------- ---- ---- --------- --------- ---- ---
Total $231,296 $217,026 6.6% 5.6% $921,750 $875,535 5.3% 5.4%
======== ======== ==== ==== ======== ======== ==== ===
(e) Constant currency information compares results between periods assuming exchange rates had remained constant period-over-period and excludes gains and losses from foreign currency contracts. We calculate constant currency information by translating current-period results using prior-year GAAP foreign currency exchange rates. The gains and/or losses from foreign currency contracts were not material for all periods presented. ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
March 31, June 30, March 31,
(In thousands) 2011 2010 2010
---------- -------- ----------
Cash $ 33,817 $ 26,881 $ 24,375
Accounts Receivable, Net 174,609 170,067 188,052
Inventories 289,825 271,058 274,656
Property and Equipment, Net 77,438 76,583 71,004
Exclusive Brand Licenses, Trademarks and
Intangibles, Net 186,600 179,444 181,552
Goodwill 21,054 21,054 21,054
Total Assets 870,562 843,471 834,785
Short-Term Debt 8,100 59,000 44,000
Current Liabilities 199,338 253,870 240,988
Long-Term Liabilities 263,230 236,984 236,145
Total Debt 258,100 277,699 267,595
Shareholders' Equity 407,994 352,617 357,652
Working Capital 375,301 306,524 305,564
SUPPLEMENTARY CASH FLOW INFORMATION
(Unaudited)
(In thousands)
Nine Months Ended
-----------------------
March 31, March 31,
2011 2010
----------- ---------
Net cash provided by operating activities $ 59,187 $ 102,974
Net cash used in investing activities (32,390) (26,806)
Net cash used in financing activities (21,609) (75,406)
Net increase in cash and cash equivalents 6,936 1,273
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Elizabeth Arden, Inc. is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "should," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our guidance and expectations regarding net sales, earnings, gross margins, operating cash flow and returns on invested capital, and the savings and benefits we expect in connection with our Global Efficiency Re-engineering initiative. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations:
-- factors affecting our relationships with our customers or our
customers' businesses, including the absence of contracts with
customers, our customers' financial condition, and changes in the
retail, fragrance and cosmetic industries, such as the consolidation
of retailers and the associated closing of retail doors as well as
retailer inventory control practices, including, but not limited to
levels of inventory carried at point of sale and practices used to
control inventory shrinkage;
-- risks of international operations, including foreign currency
fluctuations, hedging activities, economic and political consequences
of terrorist attacks, disruptions in travel, unfavorable changes in
U.S. or international laws or regulations, diseases and pandemics and
political instability in certain regions of the world;
-- our reliance on third-party manufacturers for substantially all of our
owned and licensed products and our absence of contracts with
suppliers of distributed brands and components for manufacturing of
owned and licensed brands;
-- delays in shipments, inventory shortages and higher costs of
production due to the loss of or disruption in our distribution
facilities or at key third party manufacturing or fulfillment
facilities that manufacture or provide logistic services for our
products;
-- our ability to respond in a timely manner to changing consumer
preferences and purchasing patterns and other international and
domestic conditions and events that impact consumer confidence and
demand, such as domestic or global recessions;
-- our ability to protect our intellectual property rights;
-- the success, or changes in the timing or scope, of our new product
launches, advertising and merchandising programs;
-- the quality, safety and efficacy of our products;
-- the impact of competitive products and pricing;
-- our ability to (i) implement our growth strategy and acquire or
license additional brands or secure additional distribution
arrangements, (ii) successfully and cost-effectively integrate
acquired businesses or new brands, and (iii) finance our growth
strategy and our working capital requirements;
-- our level of indebtedness, our ability to realize sufficient cash flow
from operations to meet our debt service obligations and working
capital requirements and the restrictive covenants in our revolving
credit facility and the indenture for our 7 3/8% senior notes;
-- changes in product mix to less profitable products;
-- the retention and availability of key personnel;
-- changes in the legal, regulatory and political environment that
impact, or will impact, our business, including changes to customs or
trade regulations, laws or regulations relating to ingredients or
other chemicals contained in products or packaging, or accounting
standards or critical accounting estimates;
-- the success of our Global Efficiency Re-engineering initiative,
including our transition to a turnkey manufacturing process and our
new financial accounting and order processing system;
-- the potential for significant impairment charges relating to our
trademarks, goodwill or other long-lived assets that could result
from a number of factors, including downward pressure on our stock
price; and
-- other unanticipated risks and uncertainties.
We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended June 30, 2010. Company Contact: Marcey Becker Senior Vice President, Finance (212) 212-1068 Investor/Press Contact: Allison Malkin/Michael Fox Integrated Corporate Relations (203) 682-8200 SOURCE: Elizabeth Arden, Inc. |
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