Net Sales of $203.5 million
Sales Decrease of 3.4%; Increase of 1.3% Excluding Impact
of Foreign Currency Translation
NEW YORK, May 7, 2009 (GLOBE NEWSWIRE) -- Elizabeth Arden, Inc. (Nasdaq:RDEN), a global prestige beauty products company, today announced financial results for its third fiscal quarter ended March 31, 2009.
THIRD QUARTER RESULTS
For the third fiscal quarter ended March 31, 2009, the Company reported net sales of $203.5 million, a decrease of 3.4%, as compared to the third quarter of the prior fiscal year. Excluding the unfavorable impact of foreign currency translation, net sales increased 1.3%. For the third fiscal quarter ended March 31, 2009, the net loss per diluted share was $0.13 as compared to a net loss per diluted share of $0.14 for the prior year period. Excluding restructuring and expenses associated with the Company's Global Efficiency Re-engineering project, the net loss per diluted share for the three months ended March 31, 2009 was $0.19 compared to a net loss per diluted share of $0.10 for the prior year period. A reconciliation between GAAP and adjusted results can be found in the tables and footnotes to this press release.
E. Scott Beattie, Chairman, President and Chief Executive Officer of Elizabeth Arden, Inc., commented, "Our North American fragrance business is tracking as we had anticipated. We are seeing modest improvement in retail sales performance and are continuing to build market share. This, however, is being offset by weak conditions in our travel retail and distributor markets, reflecting declining passenger traffic, retailer de-stocking and the impact of credit constraints and currency volatility on our distributors, which is expected to continue."
Mr. Beattie continued, "During the quarter, we made substantial progress toward achieving our working capital and cash flow goals, and continued to maintain a strong balance sheet with $55 million of availability under our credit facility at quarter end. We reduced inventories by $30 million during the quarter and are confident we will achieve our June 30, 2009 inventory targets of $350 million to $370 million as previously disclosed, which is expected to generate additional cash flow for this fiscal year. We are also continuing to invest in our key brands and franchises. The most recent fragrance launch, the Elizabeth Arden fragrance, Pretty, has exceeded our expectations thus far, ranking as the number one fragrance launch in U.S. department stores in 2009 through March, and we anticipate this fragrance will help drive global growth of the Elizabeth Arden brand."
NINE MONTHS RESULTS
For the nine months ended March 31, 2009, the Company reported net sales of $857.7 million, a decrease of 5.2%, or 2.3% excluding the unfavorable impact of foreign currency translation, as compared to the prior year period. Net income per diluted share, excluding expenses and non-cash charges related to the Liz Claiborne license agreement, restructuring expenses and expenses associated with the Company's Global Efficiency Re-engineering project, was $0.53 as compared to net income per diluted share, excluding restructuring expenses, of $1.09 for the prior year period. On a reported basis, the net loss per diluted share was $0.09 for the nine months ended March 31, 2009, as compared to net income of $1.04 per diluted share for the nine months ended March 31, 2008.
OUTLOOK
The Company's guidance for the fiscal year ending June 30, 2009 is for net sales to decline by 6% to 6.5%, or by 2% to 2.5% excluding an expected unfavorable impact from foreign currency translation, as compared to the prior year period. Earnings per diluted share are expected to be in the range of $0.38 to $0.50. This guidance is based on continued expectations of weakness in the Company's international markets, particularly its higher margin travel retail and distributor markets as well as its European business, which markets are experiencing a rapid rise in unemployment and a sharp contraction of their economies. The guidance includes an incremental impact of unfavorable foreign currency rates of $.04 per diluted share as compared to the currency rates assumed in the Company's February 2009 guidance.
The fiscal 2009 guidance assumes April 2009 foreign currency rates and excludes expenses and non-cash charges related to the Liz Claiborne license agreement and restructuring and expenses associated with the Company's Global Efficiency Re-engineering project. The Company does not anticipate incurring any further expenses associated with the Liz Claiborne license agreement during the fourth quarter of fiscal 2009. The Company further notes that the high degree of on-going global economic uncertainty and foreign currency volatility may continue to have a negative effect on retailer and consumer confidence and demand, making forecasting difficult. The Company believes that net sales and earnings guidance excluding the impact of foreign currency and expenses and non-cash charges associated with the Liz Claiborne license agreement and restructuring and other expenses associated with the Company's Global Efficiency Re-engineering project, as applicable, 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 9:30 a.m. Eastern Time. All interested parties can listen to a live web cast of the Company's conference call by visiting the "Corporate Info" 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 22, 2009.
Elizabeth Arden is a global prestige beauty products company with an extensive portfolio of prestige beauty brands sold in over 90 countries. The company's brand portfolio includes Elizabeth Arden skincare, color, and fragrance products, PREVAGE(r) anti-aging treatments, the celebrity fragrance brands of Elizabeth Taylor, Mariah Carey, Britney Spears, Hilary Duff, Danielle Steel, and Usher; the designer fragrance brands of Juicy Couture, Alberta Ferretti, Alfred Sung, Badgley Mischka, Bob Mackie, GANT, Geoffrey Beene, Liz Claiborne, Halston, Lucky Brand, Nanette Lepore 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,
2009 2008 2009 2008
--------- --------- --------- --------
Net Sales $ 203,471 $ 210,554 $ 857,663 $904,786
Cost of Sales 115,796 119,800 511,962 528,792
--------- --------- --------- --------
Gross Profit 87,675 90,754 345,701 375,994
Gross Profit
Percentage 43.1% 43.1% 40.3% 41.6%
Selling, General
and Administrative
Expenses 86,398 83,004 316,123 294,837
Depreciation and
Amortization 6,392 6,298 19,205 18,461
--------- --------- --------- --------
Total Operating
Expenses 92,790 89,302 335,328 313,298
Interest Expense,
Net 5,643 6,067 19,244 21,821
--------- --------- --------- --------
(Loss) Income
Before Income
Taxes (10,758) (4,615) (8,871) 40,875
(Benefit from)
Provision for
Income Taxes (7,054) (803) (6,317) 10,538
--------- --------- --------- --------
Net (Loss) Income $ (3,704) $ (3,812) $ (2,554) $ 30,337
========= ========= ========= =========
As reported:
-----------
Net (Loss)
Income Per
Basic Share $ (0.13) $ (0.14) $ (0.09) $ 1.08
Net (Loss)
Income Per
Diluted Share $ (0.13) $ (0.14) $ (0.09) $ 1.04
Basic Shares 27,805 27,894 27,901 27,961
Diluted Shares 27,805 27,894 27,901 29,292
EBITDA(a) $ 1,277 $ 7,750 $ 29,578 $ 81,157
EBITDA margin(a) 0.6% 3.7% 3.4% 9.0%
Adjusted to
exclude the
effect of Liz
Claiborne-
related,
restructuring
and software
implementation
expenses, net of
taxes (b)(c)(d):
---------------
Gross Profit $ 87,675 $ 90,754 $ 365,627 $375,994
Gross Profit
Percentage 43.1% 43.1% 42.6% 41.6%
Net (Loss)
Income $ (5,293) $ (2,881) $ 15,213 $ 31,877
Net (Loss)
Income Per
Basic Share $ (0.19) $ (0.10) $ 0.55 $ 1.14
Net (Loss)
Income Per
Diluted Share $ (0.19) $ (0.10) $ 0.53 $ 1.09
EBITDA(a) $ 3,427 $ 8,878 $ 57,893 $ 83,231
EBITDA
margin(a) 1.7% 4.2% 6.8% 9.2%
(a) EBITDA is defined as net income plus the provision for income
taxes (or net loss less the benefit from 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 Liz Claiborne-related, restructuring and software
implementation expenses related to our Global Efficiency
Re-engineering initiative. 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 Liz Claiborne-related, restructuring and
other software implementation expenses. EBITDA margin
represents EBITDA divided by Net Sales.
The table below reconciles net (loss) income, as determined in
accordance with GAAP, to EBITDA and to EBITDA as adjusted.
(For a reconciliation of net income 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,
2009 2008 2009 2008
--------- --------- ---------- ---------
Net (loss) income $ (3,704) $ (3,812) $ (2,554) $ 30,337
Plus:
(Benefit from)
provision for
income taxes (7,054) (803) (6,317) 10,538
Interest
expense, net 5,643 6,067 19,244 21,821
Depreciation
and amortization 6,392 6,298 19,205 18,461
--------- --------- ---------- ---------
EBITDA 1,277 7,750 29,578 81,157
Liz Claiborne-
related
expenses(c) -- -- 23,314 --
Restructuring and
other expenses(d) 2,150 1,128 5,001 2,074
--------- --------- ---------- ---------
EBITDA as
adjusted $ 3,427 $ 8,878 $ 57,893 $ 83,231
========= ========= ========== =========
(b) The table below reconciles the calculation of (i) gross profit,
(ii) net (loss) income and (iii) net (loss) income per share
on a basic and diluted basis from the amounts reported in
accordance with GAAP to such amounts before giving effect to
Liz Claiborne related, restructuring and software implementation
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 Liz Claiborne-related, restructuring and software
implementation expenses. The presentation in the table below of
the non-GAAP information titled "Gross profit as adjusted" and
"Net (loss) income as adjusted" and "Net (loss) income per
basic and diluted share as adjusted" is not meant to be
considered in isolation or as a substitute for gross profit,
net (loss) income or net (loss) income 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,
2009 2008 2009 2008
---------- --------- ---------- ----------
Adjusted to exclude
the effect of
Liz Claiborne-related,
restructuring and
software
implementation
expenses:
----------------------
Gross Profit:
-------------
Gross profit
as reported $ 87,675 $ 90,754 $ 345,701 $ 375,994
Liz Claiborne
-related
expenses (c) -- -- 19,926 --
---------- --------- ---------- ----------
Gross profit
as adjusted $ 87,675 $ 90,754 $ 365,627 $ 375,994
========== ========= ========== ==========
Net (Loss) Income
(e):
-----------------
Net (loss)
income as
reported $ (3,704) $ (3,812) $ (2,554) $ 30,337
Liz Claiborne
-related
expenses, net
of taxes(c) -- -- 14,628 --
Restructuring
and other
expenses, net
of taxes(d) (1,589) 931 3,139 1,540
---------- --------- ---------- ----------
Net (loss)
income as
adjusted $ (5,293) $ (2,881) $ 15,213 $ 31,877
========== ========= ========== ==========
Net (Loss) Income
Per Basic Share(e):
--------------------
Net (loss)
income per
basic share
as reported $ (0.13) $ (0.14) $ (0.09) $ 1.08
Liz Claiborne
-related,
restructuring
and other
expenses,
net of
tax(c)(d) (0.06) 0.04 0.64 0.06
---------- --------- ---------- ----------
Net (loss)
income per
basic share
as adjusted $ (0.19) $ (0.10) $ 0.55 $ 1.14
========== ========= ========== ==========
Net (Loss) Income
Per Diluted Share (e):
-----------------------
Net (loss)
income per
diluted share
as reported $ (0.13) $ (0.14) $ (0.09) $ 1.04
Liz Claiborne
-related,
restructuring
and other
expenses, net
of tax(c)(d) (0.06) 0.04 0.62 0.05
---------- --------- ---------- ----------
Net (loss)
income per
diluted share
as adjusted $ (0.19) $ (0.10) $ 0.53 $ 1.09
========== ========= ========== ==========
(c) For the nine months ended March 31, 2009, includes $4.4 million
of Liz Claiborne transition expenses and $18.9 million of
non-cash expenses relating to the Liz Claiborne inventory
purchased by the Company at a higher cost prior to the effective
date of the license agreement. For the nine months ended
March 31, 2009, also includes $1.0 million of Liz Claiborne
transition expenses in cost of sales. For the nine months ended
March 31, 2009, diluted shares were assumed to be 28,591,323,
which include 690,478 potential common shares had the Company
had net income.
(d) For the three months ended March 31, 2009, restructuring and
other expenses includes $1.0 million related to implementation of
our Oracle accounting and order processing systems and $1.1 of
restructuring expenses related to our Global Efficiency
Re-engineering initiative. In addition, the three months ended
March 31, 2009 and 2008 includes $0.1 million and $1.1 million
of restructuring expenses that are not related to our Global
Efficiency Re-engineering initiative. For the nine months ended
March 31, 2009, restructuring and other expenses includes $1.7
million related to implementation of our Oracle accounting
and order processing systems and $2.3 million of restructuring
expenses related to our Global Efficiency Re-engineering
initiative. In addition, the nine months ended March 31, 2009 and
2008 include $1.0 million and $2.1 million, respectively, of
restructuring expenses that are not related to our Global
Efficiency Re-engineering initiative.
(e) On a reported basis, for the three and nine months ended March
31, 2009, our effective tax rate, which is calculated as a
percentage of the loss before income taxes, was 65.6% and 71.2%,
respectively. On an adjusted basis, for the three and nine months
ended March 31, 2009, our effective tax rate was 38.5% and
21.8%, respectively. The difference in the effective tax rates is
primarily due to the Liz Claiborne-related expenses that were
incurred in the U.S. in the first half of fiscal 2009.
SEGMENT NET SALES
The table below is a comparative summary of our net sales by
reportable segment for the three and nine months ended March 31, 2009
and 2008:
(In thousands) Three Months Ended Nine Months Ended
------------------------ -----------------------
March 31, March 31, March 31, March 31,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Segment Net Sales:
North America
Fragrance $ 120,056 $ 114,481 $ 545,804 $ 552,682
International 75,210 85,711 281,135 308,789
Other 8,205 10,362 30,724 43,315
---------- ---------- ---------- ----------
Total $ 203,471 $ 210,554 $ 857,663 $ 904,786
========== ========== ========== ==========
ELIZABETH ARDEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In thousands)
March 31, June 30, March 31,
2009 2008 2008
---------- ---------- ----------
Cash $ 17,255 $ 26,396 $ 28,392
Accounts Receivable, Net 205,127 217,446 222,634
Inventories 360,973 408,563 340,037
Property and Equipment, Net 57,419 52,148 44,566
Exclusive Brand Licenses,
Trademarks and Intangibles, Net 217,688 221,253 223,284
Total Assets 915,616 970,734 903,767
Short-Term Debt 128,200 119,000 97,800
Current Portion of Long-Term Debt 503 1,261 1,292
Current Liabilities 341,731 385,062 307,488
Long-Term Liabilities 236,496 249,071 254,775
Total Debt 351,996 343,957 322,752
Shareholders' Equity 337,389 336,601 341,504
Working Capital 293,164 306,735 322,621
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," "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, inventory reductions and cash flows, and the costs, savings and benefits we expect in connection with our re-engineering project and related restructuring plan. 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;
* 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 the current economic downturn;
* 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;
* risks of international operations, including foreign currency
fluctuations, hedging activities, economic and political
consequences of terrorist attacks, unfavorable changes in U.S.
or international tax laws or regulations, diseases and pandemics
and political instability in certain regions of the world;
* 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, such as the Liz Claiborne
fragrance 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 3/4%
senior subordinated 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 or accounting standards or critical
accounting estimates;
* the success of, and costs associated with, our re-engineering
project and related restructuring plan;
* the potential for significant impairment charges relating to our
trademark, 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, 2008 and our Quarterly Report on Form 10-Q for the period ended December 31, 2008.