Revlon segments business following TCG acquisition, ends 2013 with $234.5 million cash

By Lisa Kerner

Charlotte, N.C., March 5 - Revlon, Inc. completed its acquisition of the Colomer Group (TCG) in October and now reports the legacy Revlon business as its Consumer segment and the acquired TCG business as its Professional segment, according to chief financial officer Larry Alletto.

The company expects $30 million to $35 million annualized savings by the end of 2015 as a result of the acquisition, along with $40 million to $45 million of associated costs, said Alletto during Revlon's fourth-quarter earnings call on Wednesday.

On Nov. 1, former TCG chief executive officer Lorenzo Delpani became president and CEO of Revlon.

In December, Revlon exited its business operations in China, a move that is expected to generate additional annualized cost reductions of $11 million, according to Delpani.

Revlon had available cash of $234.5 million at Dec. 31 and available borrowings under its revolver of $150.2 million. The company reported $116.3 million of cash at the end of 2012.

Late in 2013, the company upsized its revolver to $175 million, bringing the increase in borrowing availability to $165.2 million, Alletto said.

Long-term debt was $1.86 billion for the year ended 2013, compared to $1.15 billion for the prior year.

Subsequent to the fourth quarter in February, Revlon repriced a $675 million tranche of its term loan. The spread decreased by 50 basis points and the Libor floor decreased by 25 bps for total savings of 75 bps, or an annualized savings to the company of $5 million, according to Alletto.

Financial highlights

Revlon's total company net sales for the quarter were up 28% from the same period last year at $491 million. Total company net sales for the full year grew 7% year-over-year to $1.5 billion.

Total company operating income for the fourth quarter was about $34 million compared to about $85 million in the same period last year. Operating income fell slightly for the 12-month period to $189 million from about $200 million.

Fourth-quarter Adjusted EBITDA was $92 million compared to $101 million for the fourth-quarter 2012. Adjusted EBITDA decreased 4.7% for the year to $283.7 million.

On a pro forma basis for 2012, total company net sales for both the Professional and Consumer segments would have been about $1.91 billion, and total company adjusted EBITDA would have been about $348 million, according to the earnings news release.

Net cash from operations totaled about $118 million for the quarter compared to $86 million in the prior-year period. Revlon reported net cash from operating activities of $123 million in 2013, compared to $104 million in 2012.

Fourth-quarter free cash flow was $107 million compared to $80 million in the same period last year. Free cash flow for 2013 was about $112 million, up from $84 million in the prior year.

The company used net cash of $639 million for investment activities during the year, including a net payment of about $628 million to acquire TCG. In 2012, Revlon used cash of $86 million, which included a $66.2 million payment to acquire Pure Ice.

Revlon is a New York-based cosmetics and personal-care products company.

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