LONDON, August 1, 2019 /PRNewswire/ -- Avon
Products, Inc. (NYSE:AVP) today announced its results for the
quarter ended June 30, 2019.
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THREE MONTHS ENDED
JUNE 30, 2019
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Change vs
2Q18
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Reported
(GAAP)
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Adjusted1 (Non-
GAAP)
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Reported
(GAAP)
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Adjusted1 (Non-
GAAP)
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Total US$ Reportable
Segment Revenue
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$1,170.3
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$1,170.3
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(12)%
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(12)%
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Total C$1
Reportable Segment Revenue Change
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(5)%
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(5)%
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Gross
Margin
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57.7%
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58.4%
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(240) bps
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(170)
bps
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US$ Operating
Profit
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$30.5
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$89.3
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(42)%
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16%
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Operating
Margin
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2.6%
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7.6%
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(130) bps
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190
bps
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Diluted EPS from
continuing operations
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$(0.03)
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$0.06
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$0.06
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$0.09
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Free Cash
Flow1
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$26.3
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$26.3
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$59.6
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$59.6
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Jan Zijderveld, Avon CEO, said,
"In the second quarter, we continued to execute our Open Up
strategy, with pricing and productivity gains which drove adjusted
operating margin expansion and improved free cash
flow1."
Mr. Zijderveld continued, "Our focus on productivity in the
second quarter, including less discounting, more effective
incentives, optimizing promotions and more favorable mix, led to a
5% improvement in Average Representative Sales with price/mix up
9%. We have continued to improve mix and tiering by increasing our
focus on higher priced categories, like Fragrance, Skin Care, and
product bundles. Faster development and launches of on trend
innovation has allowed us to leverage pricing power on new
items."
Mr. Zijderveld emphasized, "Recruiting and retention remain
key areas of focus. Helping Her earn more money while we generate
more profitable revenue is key to maintaining a healthier and
happier Representative base and crucial to driving our future
growth."
Gustavo Arnal, Avon CFO, said,
"In the second quarter, we drove positive impact on adjusted
operating margin and cash flow generation given our intentional
interventions to increase productivity. A combination of pricing
efforts and savings across multiple cost lines led to 190 basis
points of adjusted operating margin expansion, despite unfavorable
FX. We monetized non-core assets to self fund our Open Up Avon
strategy. Free Cash Flow improved significantly, including working
capital efficiencies."
Highlights for Second-Quarter 2019 (compared with
second-quarter 2018, unless otherwise noted):
- Total Reportable Segment Revenue decreased 12% in reported
currency and 5% in constant dollars. Price/mix increased 9%.
- Average Representative Sales in constant dollars from
Reportable Segments increased 5%, driven by increases in all
segments.
- Active Representatives from Reportable Segments declined 10%,
with decreases reported in all segments, and declined 3% compared
to first-quarter 2019.
- Gross Margin of 57.7%. Adjusted Gross Margin decreased 170
basis points to 58.4%, unfavorably impacted primarily by foreign
exchange.
- Operating Margin of 2.6%. Adjusted Operating Margin increased
190 basis points to 7.6%, driven by price/mix and savings across
multiple cost lines.
- Diluted Loss Per Share from continuing operations of
$0.03. Adjusted Diluted Earnings Per
Share of $0.06, compared with
Adjusted Diluted Loss Per Share of $0.03 for second-quarter 2018.
Second-Quarter 2019 Segment Review (compared with
second-quarter 2018, unless otherwise noted)
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SEGMENT
RESULTS
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($ in
millions)
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Revenue
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Active
Representatives
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Average
Rep Sales
C$
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Units
Sold
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Price/
Mix C$
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Active
Representatives
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US$
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C$
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Revenue &
Drivers
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Reported
(GAAP)
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% var.
vs
2Q18
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% var.
vs
2Q18
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% var. vs
2Q18
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% var. vs
2Q18
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% var.
vs
2Q18
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% var.
vs
2Q18
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% var. vs
1Q19
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Europe, Middle East
& Africa
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$
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425.1
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(15)%
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(8)%
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(9)%
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1%
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(14)%
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6%
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(7)%
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South Latin
America
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443.0
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(14)
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—
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(12)
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12
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(17)
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17
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(2)
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North Latin
America
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193.8
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(7)
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(6)
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(10)
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4
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(8)
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2
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1
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Asia
Pacific
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108.4
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(4)
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(3)
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(9)
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6
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(9)
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6
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1
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Total from
reportable segments
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1,170.3
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(12)
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(5)
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(10)
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5
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(14)
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9
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(3)
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Other operating
segments and
business activities
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4.5
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(69)
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(69)
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Total
Avon
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$
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1,174.8
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(13)%
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(5)%
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Adjustments to Second-Quarter 2019 GAAP Operating Profit to
Arrive at Adjusted Operating Profit Results
During the second quarter of 2019, the following adjustments
were made to GAAP Operating Profit to arrive at Adjusted Operating
Profit:
- The Company recorded costs to implement ("CTI") restructuring
of approximately $46 million,
primarily related to the Open Up Avon initiative, mostly for
professional services, headcount reductions and asset
write-offs.
- The Company recorded approximately $13
million of other expenses, primarily professional fees
incurred in relation to the Natura transaction, and other
impairment losses on assets.
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Operating
Profit/Margin
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2Q
2019
Operating
Profit
US$
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2Q
2019
Operating
Margin
US$
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Change in
US$ vs
2Q18
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Segment
profit/margin
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Europe, Middle East
& Africa
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$
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59.0
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13.9%
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(100) bps
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South Latin
America
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65.2
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14.7
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400
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North Latin
America
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19.1
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9.9
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70
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Asia
Pacific
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10.8
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10.0
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350
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Total from
reportable segments
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154.1
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13.2
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150
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Other operating
segments and business activities
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.5
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Unallocated global
expenses
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(65.3)
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Total Avon
Adjusted (Non-GAAP)
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$
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89.3
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7.6%
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190
bps
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CTI restructuring
initiatives
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(45.7)
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Impairment loss on
assets and Other items
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(13.1)
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Total Avon
Reported (GAAP)
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$
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30.5
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2.6%
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(130)
bps
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Other operating segments and business activities include revenue
from the sale of products to New Avon LLC since the separation of
the Company's North America
business into New Avon LLC on March 1,
2016 and ongoing royalties from the licensing of the
Company's name and products. Other operating segments and business
activities in 2018 also included the business results for
Australia and New Zealand, which the Company exited in
2018.
Second-Quarter 2019 Cash Flow Review (compared with
second-quarter 2018)
- Free Cash Flow improved $59.6
million compared to the prior year as cash proceeds from
asset sales funded Open Up Avon initiatives and net favorability
resulted from improved earnings and working capital.
- Net cash provided by operating activities of continuing
operations improved $17.5 million
compared to the prior year, driven by higher cash generated from
earnings and improved working capital, partially offset by an
increase in restructuring payments.
- Net cash provided by investing activities of continuing
operations improved $42.1 million
compared to the prior year, primarily due to net proceeds from the
sales of the Rye office and the Malaysia Maximin business.
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Three Months
Ended
June 30
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2019
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2018
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Change
vs
2Q18
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Net cash provided
(used) by
operating activities of
continuing
operations
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$
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7.1
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$
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(10.4)
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$
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17.5
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Net cash provided
(used) by
investing activities of
continuing
operations
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$
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19.2
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$
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(22.9)
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$
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42.1
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Free Cash
Flow
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$
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26.3
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$
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(33.3)
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$
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59.6
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Subsequent Event
In July 2019, the Company issued
$400 million in aggregate principal
amount of 6.5% Senior Notes which will mature on August 15, 2022. The proceeds were partially used
to purchase an aggregate principal amount of $275 million of the Company's 4.6% Notes, due
during 2020, under a cash tender offer completed during
July 2019.
Conference call
Avon will conduct a conference
call at 9:00 a.m. Eastern Time today
to discuss its quarterly results. The dial-in number for the call
is (877) 407-0789 in North America
or (201) 689-8562 from international locations. The call and
related slide presentation will be webcast live at
investor.avonworldwide.com and can be accessed or downloaded from
that site for a period of one year. A telephonic playback of the
call will also be available from 12:00 p.m.
Eastern Time, August 1, 2019
through August 15, 2019. North
American listeners may dial (844) 512-2921 and international
listeners may dial (412) 317-6671; the passcode is 13692192.
About Avon Products, Inc.
For 130 years Avon has stood
for women: providing innovative, quality beauty products which are
primarily sold to women, through women. Millions of independent
Representatives across the world sell iconic Avon brands such as
Avon Color and ANEW through their social networks, building their
own beauty businesses on a full- or part-time basis. Avon supports women's empowerment,
entrepreneurship and well-being and has donated over $1 billion to women's causes through Avon and the Avon Foundation. Learn more about
Avon and its products at
www.avonworldwide.com. #Stand4Her
(AV-IR)
Footnotes
1 "Adjusted" items refer to financial measures that
are derived from measures calculated in accordance with GAAP, but
which have been adjusted to exclude certain items. Other Adjusted
financial measures that the Company refers to include constant
dollar ("C$") items and Free Cash Flow which the Company defines as
net cash provided (used) by operating activities of continuing
operations plus net cash provided (used) by investing activities of
continuing operations. All of these adjusted items are Non-GAAP
financial measures as described below under "Non-GAAP Financial
Measures." These Non-GAAP measures should not be considered in
isolation, or as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. Please refer to
the Company's "Non-GAAP Financial Measures" description at the end
of this release and the reconciliations the Company provides of
these Non-GAAP financial measures to their comparable GAAP
measures.
Forward-Looking Statements
This press release contains "forward-looking statements" that
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including statements
relating to the Company's growth and long-term success, and
improved representative engagement and service. Because
forward-looking statements inherently involve risks and
uncertainties, actual future results may differ materially from
those expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to, the
possibility of business disruption, competitive uncertainties, and
general economic and business conditions in Avon's markets as well as the other risks
detailed in Avon's Annual Report
on Form 10-K for the year ended December 31,
2018, and Avon's other
filings with the Securities and Exchange Commission. Avon undertakes no obligation to update any
statements in this press release for changes that happen after the
date of this release.
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AVON PRODUCTS,
INC.
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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(Unaudited)
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(In millions,
except per share data)
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Three Months
Ended
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Percent
Change
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Six Months
Ended
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Percent
Change
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June
30
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June
30
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2019
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2018
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2019
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2018
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Product
sales
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$
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1,108.8
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$
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1,268.8
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(13)%
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$
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2,225.0
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$
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2,578.4
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(14)%
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Other
revenue
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66.0
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83.1
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136.7
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167.0
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Total
revenue
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1,174.8
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1,351.9
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(13)%
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2,361.7
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2,745.4
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(14)%
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Cost of
sales
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(497.5)
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(539.7)
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(1,014.5)
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(1,119.4)
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Selling, general and
administrative expenses
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(646.8)
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(759.2)
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(1,320.6)
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(1,528.1)
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Operating
profit
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30.5
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53.0
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(42)%
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26.6
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97.9
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(73)%
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Interest
expense
|
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(30.7)
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|
(34.5)
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(63.9)
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(70.7)
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Loss on
extinguishment of debt and credit facilities
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—
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(2.9)
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(2.0)
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(2.9)
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Interest
income
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1.5
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3.5
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3.2
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7.7
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Other income
(expense), net
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6.8
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(19.4)
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29.4
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(21.9)
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Gain on sale of
business / assets
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13.2
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—
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23.5
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—
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Total other
expenses
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|
(9.2)
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|
|
(53.3)
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|
|
(9.8)
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|
(87.8)
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Income (loss) from
continuing operations, before income
taxes
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|
21.3
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|
(0.3)
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*
|
|
16.8
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|
|
10.1
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66%
|
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Income
taxes
|
|
(27.2)
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|
|
(36.7)
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(46.7)
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(68.2)
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Loss from continuing
operations, net of tax
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|
(5.9)
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|
(37.0)
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84%
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(29.9)
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(58.1)
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49%
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Loss from
discontinued operations, net of tax
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(13.2)
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—
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(22.7)
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—
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Net loss
|
|
(19.1)
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|
|
(37.0)
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48%
|
|
(52.6)
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(58.1)
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9%
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Net (income) loss
attributable to noncontrolling interests
|
|
(0.4)
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|
0.9
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|
0.4
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1.7
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Net loss attributable
to Avon
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$
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(19.5)
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$
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(36.1)
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46%
|
|
$
|
(52.2)
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|
$
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(56.4)
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7%
|
|
|
|
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|
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|
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Loss per share
(1)
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Basic
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Basic EPS from
continuing operations
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$
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(0.03)
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|
$
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(0.09)
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67%
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|
$
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(0.09)
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$
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(0.15)
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40%
|
|
Basic EPS from
discontinued operations
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(0.03)
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|
—
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*
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(0.05)
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—
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*
|
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Basic EPS
attributable to Avon
|
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$
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(0.06)
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|
|
$
|
(0.09)
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33%
|
|
$
|
(0.14)
|
|
|
$
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(0.15)
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7%
|
|
|
|
|
|
|
|
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Diluted
|
|
|
|
|
|
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Diluted EPS from
continuing operations
|
|
$
|
(0.03)
|
|
|
$
|
(0.09)
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67%
|
|
$
|
(0.09)
|
|
|
$
|
(0.15)
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|
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40%
|
|
Diluted EPS from
discontinued operations
|
|
(0.03)
|
|
|
—
|
|
|
*
|
|
(0.05)
|
|
|
—
|
|
|
*
|
|
Diluted EPS
attributable to Avon
|
|
$
|
(0.06)
|
|
|
$
|
(0.09)
|
|
|
33%
|
|
$
|
(0.14)
|
|
|
$
|
(0.15)
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
442.3
|
|
|
442.2
|
|
|
|
|
442.5
|
|
|
441.5
|
|
|
|
|
Diluted
|
|
442.5
|
|
|
442.2
|
|
|
|
|
442.6
|
|
|
441.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Under the
two-class method, loss per share is calculated using net loss
allocable to common shares, which is derived by reducing net loss
by the loss allocable to participating securities and earnings
allocated to convertible preferred stock. Net loss allocable to
common shares used in the basic and diluted earnings per share
calculation was ($25.5) and ($41.7) for the three months ended June
30, 2019 and 2018, respectively. Net loss allocable to common
shares used in the basic and diluted earnings per share calculation
was ($64.1) and ($67.8) for the six months ended June 30, 2019 and
2018, respectively.
|
|
AVON PRODUCTS,
INC.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
December 31, 2018
(Audited), March 31, 2019 (Unaudited) and June 30, 2019
(Unaudited)
|
|
(In
millions)
|
|
|
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
|
2019
|
|
2019
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
421.0
|
|
|
$
|
406.4
|
|
|
$
|
532.7
|
|
|
Restricted
cash
|
|
—
|
|
|
17.0
|
|
|
—
|
|
|
Accounts receivable,
net
|
|
332.8
|
|
|
340.9
|
|
|
349.7
|
|
|
Inventories
|
|
515.6
|
|
|
532.3
|
|
|
542.0
|
|
|
Prepaid expenses and
other
|
|
264.2
|
|
|
255.2
|
|
|
272.0
|
|
|
Assets held for
sale
|
|
10.1
|
|
|
15.7
|
|
|
65.6
|
|
|
Total current
assets
|
|
1,543.7
|
|
|
1,567.5
|
|
|
1,762.0
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, at cost
|
|
1,177.8
|
|
|
1,200.5
|
|
|
1,207.8
|
|
|
Less accumulated
depreciation
|
|
(657.6)
|
|
|
(657.3)
|
|
|
(650.2)
|
|
|
Property, plant and
equipment, net
|
|
520.2
|
|
|
543.2
|
|
|
557.6
|
|
|
|
|
|
|
|
|
|
Right-of-use
assets
|
|
174.9
|
|
|
180.3
|
|
|
—
|
|
|
Goodwill
|
|
89.9
|
|
|
88.6
|
|
|
87.4
|
|
|
Deferred tax
asset
|
|
208.2
|
|
|
204.2
|
|
|
212.6
|
|
|
Other
assets
|
|
434.3
|
|
|
413.7
|
|
|
390.4
|
|
|
Total
assets
|
|
$
|
2,971.2
|
|
|
$
|
2,997.5
|
|
|
$
|
3,010.0
|
|
|
|
|
|
|
|
|
|
Liabilities,
Series C Convertible Preferred Stock and Shareholders'
Deficit
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
Debt maturing within
one year
|
|
398.5
|
|
|
425.4
|
|
|
12.0
|
|
|
Accounts
payable
|
|
682.2
|
|
|
706.0
|
|
|
816.5
|
|
|
Accrued
compensation
|
|
94.1
|
|
|
103.9
|
|
|
85.5
|
|
|
Other accrued
liabilities
|
|
436.1
|
|
|
425.2
|
|
|
451.3
|
|
|
Sales taxes and taxes
other than income
|
|
116.0
|
|
|
94.1
|
|
|
103.9
|
|
|
Income
taxes
|
|
11.7
|
|
|
11.0
|
|
|
15.9
|
|
|
Liabilities held for
sale
|
|
—
|
|
|
0.1
|
|
|
11.4
|
|
|
Current liabilities
of discontinued operations
|
|
18.1
|
|
|
9.5
|
|
|
—
|
|
|
Total current
liabilities
|
|
1,756.7
|
|
|
1,775.2
|
|
|
1,496.5
|
|
|
Long-term
debt
|
|
1,197.0
|
|
|
1,196.4
|
|
|
1,581.6
|
|
|
Long-term operating
lease liability
|
|
144.8
|
|
|
150.4
|
|
|
—
|
|
|
Employee benefit
plans
|
|
129.6
|
|
|
128.2
|
|
|
128.3
|
|
|
Long-term income
taxes
|
|
140.9
|
|
|
135.3
|
|
|
136.2
|
|
|
Other
liabilities
|
|
54.8
|
|
|
55.2
|
|
|
72.1
|
|
|
Total
liabilities
|
|
3,423.8
|
|
|
3,440.7
|
|
|
3,414.7
|
|
|
|
|
|
|
|
|
|
Series C convertible
preferred stock
|
|
504.7
|
|
|
498.3
|
|
|
492.1
|
|
|
|
|
|
|
|
|
|
Shareholders'
Deficit
|
|
|
|
|
|
|
|
Common
stock
|
|
190.7
|
|
|
190.6
|
|
|
190.3
|
|
|
Additional paid-in
capital
|
|
2,307.5
|
|
|
2,302.1
|
|
|
2,303.6
|
|
|
Retained
earnings
|
|
2,169.5
|
|
|
2,195.4
|
|
|
2,234.3
|
|
|
Accumulated other
comprehensive loss
|
|
(1,028.9)
|
|
|
(1,034.4)
|
|
|
(1,030.4)
|
|
|
Treasury stock, at
cost
|
|
(4,603.3)
|
|
|
(4,602.3)
|
|
|
(4,602.3)
|
|
|
Total Avon
shareholders' deficit
|
|
(964.5)
|
|
|
(948.6)
|
|
|
(904.5)
|
|
|
Noncontrolling interests
|
|
7.2
|
|
|
7.1
|
|
|
7.7
|
|
|
Total shareholders'
deficit
|
|
(957.3)
|
|
|
(941.5)
|
|
|
(896.8)
|
|
|
Total liabilities,
series C convertible preferred stock and
shareholders' deficit
|
|
$
|
2,971.2
|
|
|
$
|
2,997.5
|
|
|
$
|
3,010.0
|
|
|
|
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(In
millions)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30
|
|
June
30
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(19.1)
|
|
|
$
|
(37.0)
|
|
|
$
|
(52.6)
|
|
|
$
|
(58.1)
|
|
|
Loss from
discontinued operations, net of tax
|
|
(13.2)
|
|
|
—
|
|
|
(22.7)
|
|
|
—
|
|
|
Loss from continuing
operations, net of tax
|
|
(5.9)
|
|
|
(37.0)
|
|
|
(29.9)
|
|
|
(58.1)
|
|
|
Adjustments to
reconcile net loss to net cash provided (used) by
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
15.9
|
|
|
20.8
|
|
|
36.5
|
|
|
41.6
|
|
|
Amortization
|
|
6.2
|
|
|
6.7
|
|
|
12.8
|
|
|
13.8
|
|
|
Provision for
doubtful accounts
|
|
28.8
|
|
|
43.1
|
|
|
58.7
|
|
|
86.2
|
|
|
Provision for
obsolescence
|
|
9.5
|
|
|
3.6
|
|
|
16.2
|
|
|
13.3
|
|
|
Share-based
compensation
|
|
5.7
|
|
|
3.7
|
|
|
5.2
|
|
|
7.5
|
|
|
Foreign exchange
losses (gains)
|
|
11.9
|
|
|
8.9
|
|
|
(7.3)
|
|
|
13.5
|
|
|
Deferred income
taxes
|
|
(0.9)
|
|
|
(2.0)
|
|
|
7.3
|
|
|
(0.2)
|
|
|
Impairment loss on
assets
|
|
13.3
|
|
|
—
|
|
|
13.3
|
|
|
—
|
|
|
Gain on sale of
business / assets
|
|
(13.2)
|
|
|
—
|
|
|
(23.5)
|
|
|
—
|
|
|
Other
|
|
3.5
|
|
|
—
|
|
|
5.2
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(16.6)
|
|
|
(45.6)
|
|
|
(40.9)
|
|
|
(50.0)
|
|
|
Inventories
|
|
13.2
|
|
|
(41.3)
|
|
|
18.0
|
|
|
(99.7)
|
|
|
Prepaid expenses and
other
|
|
(23.2)
|
|
|
1.6
|
|
|
15.2
|
|
|
1.7
|
|
|
Accounts payable and
accrued liabilities
|
|
(47.1)
|
|
|
29.7
|
|
|
(211.3)
|
|
|
(76.6)
|
|
|
Income and other
taxes
|
|
19.2
|
|
|
0.6
|
|
|
7.2
|
|
|
(0.3)
|
|
|
Noncurrent assets and
liabilities
|
|
(13.2)
|
|
|
(3.2)
|
|
|
(18.3)
|
|
|
(2.6)
|
|
|
Net cash provided
(used) by operating activities of continuing
operations
|
|
7.1
|
|
|
(10.4)
|
|
|
(135.6)
|
|
|
(106.7)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(11.3)
|
|
|
(20.2)
|
|
|
(32.5)
|
|
|
(48.0)
|
|
|
Disposal of
assets
|
|
0.4
|
|
|
0.6
|
|
|
0.8
|
|
|
1.4
|
|
|
Net proceeds from
sale of business
|
|
30.1
|
|
|
—
|
|
|
76.5
|
|
|
—
|
|
|
Other investing
activities
|
|
—
|
|
|
(3.3)
|
|
|
—
|
|
|
(3.3)
|
|
|
Net cash provided
(used) by investing activities of continuing
operations
|
|
19.2
|
|
|
(22.9)
|
|
|
44.8
|
|
|
(49.9)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
Debt, net (maturities
of three months or less)
|
|
(26.7)
|
|
|
(14.0)
|
|
|
0.5
|
|
|
(10.4)
|
|
|
Repayment of
debt
|
|
(0.3)
|
|
|
(238.1)
|
|
|
(0.3)
|
|
|
(238.6)
|
|
|
Repurchase of common
stock
|
|
(1.1)
|
|
|
(0.5)
|
|
|
(1.1)
|
|
|
(3.2)
|
|
|
Other financing
activities
|
|
—
|
|
|
(0.1)
|
|
|
(9.2)
|
|
|
(0.1)
|
|
|
Net cash used by
financing activities of continuing operations
|
|
(28.1)
|
|
|
(252.7)
|
|
|
(10.1)
|
|
|
(252.3)
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
Net cash used by
operating activities of discontinued operations
|
|
(4.6)
|
|
|
—
|
|
|
(4.6)
|
|
|
—
|
|
|
Net cash used by
discontinued operations
|
|
(4.6)
|
|
|
—
|
|
|
(4.6)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents, and
restricted cash
|
|
4.0
|
|
|
(42.6)
|
|
|
(2.3)
|
|
|
(28.7)
|
|
|
Net decrease in cash
and cash equivalents, and restricted cash
|
|
(2.4)
|
|
|
(328.6)
|
|
|
(107.8)
|
|
|
(437.6)
|
|
|
Cash and cash
equivalents, and restricted cash at beginning of period
(1)
|
|
431.0
|
|
|
772.5
|
|
|
536.4
|
|
|
881.5
|
|
|
Cash and cash
equivalents, and restricted cash at end of period
(2)
|
|
$
|
428.6
|
|
|
$
|
443.9
|
|
|
$
|
428.6
|
|
|
$
|
443.9
|
|
|
(1)
|
The balance at the
beginning of the six month period ended June 30, 2019 includes cash
and cash equivalents of $3.7 classified as Assets held for sale in
the Company's Consolidated Balance Sheets at the end of the year in
2018
|
|
(2)
|
Includes restricted
cash of $7.6 related to the sale of Avon Manufacturing (Guangzhou),
Ltd. at June 30, 2019.
|
|
AVON PRODUCTS,
INC.
|
|
SUPPLEMENTAL
SCHEDULE
|
|
NON-GAAP FINANCIAL
MEASURES
|
|
(Unaudited)
|
|
Three Months Ended
June 30, 2019
|
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the most directly comparable financial
measure calculated and reported in accordance with GAAP.
|
|
|
|
THREE MONTHS ENDED
JUNE 30, 2019
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Impairment
loss on assets
and other
items2
|
|
Adjusted
(Non-GAAP)
|
|
Total
revenue
|
|
$
|
1,174.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,174.8
|
|
|
Cost of
sales
|
|
(497.5)
|
|
|
8.6
|
|
|
—
|
|
|
(488.9)
|
|
|
Selling, general and
administrative expenses
|
|
(646.8)
|
|
|
37.1
|
|
|
13.1
|
|
|
(596.6)
|
|
|
Operating
profit
|
|
30.5
|
|
|
45.7
|
|
|
13.1
|
|
|
89.3
|
|
|
Gain on sale of
business / assets1
|
|
13.2
|
|
|
(13.2)
|
|
|
—
|
|
|
—
|
|
|
All other
expenses
|
|
(22.4)
|
|
|
—
|
|
|
—
|
|
|
(22.4)
|
|
|
Income from
continuing operations, before income taxes
|
|
21.3
|
|
|
32.5
|
|
|
13.1
|
|
|
66.9
|
|
|
Income
taxes
|
|
(27.2)
|
|
|
(6.6)
|
|
|
—
|
|
|
(33.8)
|
|
|
(Loss) income from
continuing operations, net of tax
|
|
$
|
(5.9)
|
|
|
$
|
25.9
|
|
|
$
|
13.1
|
|
|
$
|
33.1
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.03)
|
|
|
|
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
57.7
|
%
|
|
0.7
|
|
|
—
|
|
|
58.4
|
%
|
|
SG&A as a % of
revenue
|
|
55.1
|
%
|
|
(3.2)
|
|
|
(1.1)
|
|
|
50.8
|
%
|
|
Operating
margin
|
|
2.6
|
%
|
|
3.9
|
|
|
1.1
|
|
|
7.6
|
%
|
|
Effective tax
rate
|
|
127.7
|
%
|
|
|
|
|
|
50.5
|
%
|
|
|
|
|
|
|
|
|
|
1Gain relates to the sales of the Rye office and the
Malaysia Maximin business.
2The Company recorded approximately $13 million of other expenses, primarily
professional fees incurred in relation to the Natura transaction,
and other impairment losses on assets.
Amounts in the table above may not necessarily sum because the
computations are made independently.
Note: The diluted EPS impact for each Non-GAAP item on the table
above is not provided due to the participation rights of the Series
C convertible preferred stock. The Reported and Adjusted diluted
EPS are calculated independently and factor in the participation
rights of the Series C convertible preferred stock, and, therefore,
would cause the amounts not to sum to Adjusted diluted EPS.
|
|
Three Months
Ended June 30,
2019
|
|
Net cash provided by
operating activities of continuing operations
|
|
$
|
7.1
|
|
|
Net cash provided by
investing activities of continuing operations
|
|
19.2
|
|
|
Free cash
flow
|
|
$
|
26.3
|
|
|
|
|
|
Net cash used by
financing activities of continuing operations
|
|
$
|
(28.1)
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
|
SUPPLEMENTAL
SCHEDULE
|
|
NON-GAAP FINANCIAL
MEASURES
|
|
(Unaudited)
|
|
Six Months Ended
June 30, 2019
|
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the most directly comparable financial
measure calculated and reported in accordance with GAAP.
|
|
|
|
SIX MONTHS ENDED
JUNE 30, 2019
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Impairment
loss on assets
and other
items 2
|
|
Adjusted
(Non-GAAP)
|
|
Total
revenue
|
|
$
|
2,361.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,361.7
|
|
|
Cost of
sales
|
|
(1,014.5)
|
|
|
12.9
|
|
|
—
|
|
|
(1,001.6)
|
|
|
Selling, general and
administrative expenses
|
|
(1,320.6)
|
|
|
86.3
|
|
|
17.2
|
|
|
(1,217.1)
|
|
|
Operating
profit
|
|
26.6
|
|
|
99.2
|
|
|
17.2
|
|
|
143.0
|
|
|
Gain on sale of
business / assets1
|
|
23.5
|
|
|
(23.5)
|
|
|
—
|
|
|
—
|
|
|
All other
expenses
|
|
(33.3)
|
|
|
—
|
|
|
—
|
|
|
(33.3)
|
|
|
Income from
continuing operations, before income taxes
|
|
16.8
|
|
|
75.7
|
|
|
17.2
|
|
|
109.7
|
|
|
Income
taxes
|
|
(46.7)
|
|
|
(10.3)
|
|
|
—
|
|
|
(57.0)
|
|
|
(Loss) income from
continuing operations, net of tax
|
|
$
|
(29.9)
|
|
|
$
|
65.4
|
|
|
$
|
17.2
|
|
|
$
|
52.7
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
|
$
|
(0.09)
|
|
|
|
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
57.0
|
%
|
|
0.6
|
|
|
—
|
|
|
57.6
|
%
|
|
SG&A as a % of
revenue
|
|
55.9
|
%
|
|
(3.6)
|
|
|
(0.7)
|
|
|
51.5
|
%
|
|
Operating
margin
|
|
1.1
|
%
|
|
4.2
|
|
|
0.7
|
|
|
6.1
|
%
|
|
Effective tax
rate
|
|
278.0
|
%
|
|
|
|
|
|
52.0
|
%
|
|
|
|
|
|
|
|
|
|
1Gain relates to the sale of the China manufacturing facility in the first
quarter of 2019 and to the sales of the Rye office and the Malaysia
Maximin business in the second quarter of 2019.
2The Company recorded approximately $17 million of other expenses, primarily
professional fees incurred in relation to the Natura transaction,
and other impairment losses on assets.
Amounts in the table above may not necessarily sum because the
computations are made independently.
Note: The diluted EPS impact for each Non-GAAP item on the table
above is not provided due to the participation rights of the Series
C convertible preferred stock. The Reported and Adjusted diluted
EPS are calculated independently and factor in the participation
rights of the Series C convertible preferred stock, and, therefore,
would cause the amounts not to sum to Adjusted diluted EPS.
|
|
Six Months
Ended June 30,
2019
|
|
Net cash used by
operating activities of continuing operations
|
|
$
|
(135.6)
|
|
|
Net cash provided by
investing activities of continuing operations
|
|
44.8
|
|
|
Free cash
flow
|
|
$
|
(90.8)
|
|
|
|
|
|
Net cash used by
financing activities of continuing operations
|
|
$
|
(10.1)
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
|
SUPPLEMENTAL
SCHEDULE
|
|
NON-GAAP FINANCIAL
MEASURES
|
|
(Unaudited)
|
|
Three Months Ended
June 30, 2018
|
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the most directly comparable financial
measure calculated and reported in accordance with GAAP.
|
|
|
|
THREE MONTHS ENDED
JUNE 30, 2018
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Special tax
items
|
|
Adjusted
(Non-GAAP)
|
|
Total
revenue
|
|
$
|
1,351.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,351.9
|
|
|
Cost of
sales
|
|
(539.7)
|
|
|
0.5
|
|
|
—
|
|
|
(539.2)
|
|
|
Selling, general and
administrative expenses
|
|
(759.2)
|
|
|
23.2
|
|
|
—
|
|
|
(736.0)
|
|
|
Operating
profit
|
|
53.0
|
|
|
23.7
|
|
|
—
|
|
|
76.7
|
|
|
(Loss) income before
income taxes
|
|
(0.3)
|
|
|
23.7
|
|
|
—
|
|
|
23.4
|
|
|
Income
taxes
|
|
(36.7)
|
|
|
—
|
|
|
5.5
|
|
|
(31.2)
|
|
|
Net loss
|
|
$
|
(37.0)
|
|
|
$
|
23.7
|
|
|
$
|
5.5
|
|
|
$
|
(7.8)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$
|
(0.09)
|
|
|
|
|
|
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
60.1
|
%
|
|
—
|
|
|
—
|
|
|
60.1
|
%
|
|
SG&A as a % of
revenue
|
|
56.2
|
%
|
|
(1.8)
|
|
|
—
|
|
|
54.4
|
%
|
|
Operating
margin
|
|
3.9
|
%
|
|
1.8
|
|
|
—
|
|
|
5.7
|
%
|
|
Effective tax
rate
|
|
*
|
|
|
|
|
|
133.3
|
%
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful
Amounts in the table above may not necessarily sum because the
computations are made independently.
Note: The diluted EPS impact for each Non-GAAP item on the table
above is not provided due to the participation rights of the Series
C convertible preferred stock. The Reported and Adjusted diluted
EPS are calculated independently and factor in the participation
rights of the Series C convertible preferred stock, and, therefore,
would cause the amounts not to sum to Adjusted diluted EPS.
|
|
Three Months
Ended June 30,
2018
|
|
Net cash used by
operating activities of continuing operations
|
|
$
|
(10.4)
|
|
|
Net cash used by
investing activities of continuing operations
|
|
(22.9)
|
|
|
Free cash
flow
|
|
$
|
(33.3)
|
|
|
|
|
|
Net cash used by
financing activities of continuing operations
|
|
$
|
(252.7)
|
|
|
|
|
|
AVON PRODUCTS,
INC.
|
|
SUPPLEMENTAL
SCHEDULE
|
|
NON-GAAP FINANCIAL
MEASURES
|
|
(Unaudited)
|
|
Six Months Ended
June 30, 2018
|
|
(In millions,
except per share data)
|
|
This supplemental
schedule provides adjusted Non-GAAP financial information and a
quantitative reconciliation of the difference between the Non-GAAP
financial measure and the most directly comparable financial
measure calculated and reported in accordance with GAAP.
|
|
|
|
SIX MONTHS ENDED
JUNE 30, 2018
|
|
|
Reported
(GAAP)
|
|
CTI
restructuring
initiatives
|
|
Special tax
items
|
|
Adjusted
(Non-GAAP)
|
|
Total
revenue
|
|
$
|
2,745.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,745.4
|
|
|
Cost of
sales
|
|
(1,119.4)
|
|
|
1.1
|
|
|
—
|
|
|
(1,118.3)
|
|
|
Selling, general and
administrative expenses
|
|
(1,528.1)
|
|
|
33.5
|
|
|
—
|
|
|
(1,494.6)
|
|
|
Operating
profit
|
|
97.9
|
|
|
34.6
|
|
|
—
|
|
|
132.5
|
|
|
Income before income
taxes
|
|
10.1
|
|
|
34.6
|
|
|
—
|
|
|
44.7
|
|
|
Income
taxes
|
|
(68.2)
|
|
|
(2.1)
|
|
|
14.7
|
|
|
(55.6)
|
|
|
Net loss
|
|
$
|
(58.1)
|
|
|
$
|
32.5
|
|
|
$
|
14.7
|
|
|
$
|
(10.9)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$
|
(0.15)
|
|
|
|
|
|
|
$
|
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
59.2
|
%
|
|
—
|
|
|
—
|
|
|
59.3
|
%
|
|
SG&A as a % of
revenue
|
|
55.7
|
%
|
|
(1.2)
|
|
|
—
|
|
|
54.4
|
%
|
|
Operating
margin
|
|
3.6
|
%
|
|
1.2
|
|
|
—
|
|
|
4.8
|
%
|
|
Effective tax
rate
|
|
675.2
|
%
|
|
|
|
|
|
124.4
|
%
|
|
|
|
|
|
|
|
|
|
Amounts in the table above may not necessarily sum because the
computations are made independently.
Note: The diluted EPS impact for each Non-GAAP item on the table
above is not provided due to the participation rights of the Series
C convertible preferred stock. The Reported and Adjusted diluted
EPS are calculated independently and factor in the participation
rights of the Series C convertible preferred stock, and, therefore,
would cause the amounts not to sum to Adjusted diluted EPS.
|
|
Six Months
Ended
June 30,
2018
|
|
Net cash used by
operating activities of continuing operations
|
|
$
|
(106.7)
|
|
|
Net cash used by
investing activities of continuing operations
|
|
(49.9)
|
|
|
Free cash
flow
|
|
$
|
(156.6)
|
|
|
|
|
|
Net cash used by
financing activities of continuing operations
|
|
$
|
(252.3)
|
|
|
|
|
Non-GAAP Financial Measures
To supplement the Company's financial results presented in
accordance with GAAP, the Company discloses operating results that
have been adjusted to exclude the impact of changes due to the
translation of foreign currencies into U.S. dollars, including
changes in: revenue, operating profit (loss), Adjusted operating
profit, operating margin, Adjusted operating margin and diluted
earnings (loss) per share. The Company also refers to these
adjusted financial measures as constant dollar items, which are
Non-GAAP financial measures. The Company believes these measures
provide investors an additional perspective on trends and
underlying business results. To exclude the impact of changes due
to the translation of foreign currencies into U.S. dollars, the
Company calculates current-year results and prior-year results at
constant exchange rates, which are updated on an annual basis as
part of the Company's budgeting process. Foreign currency impact is
determined as the difference between actual growth rates and
constant-dollar growth rates. The approximate unfavorable impact of
foreign currency on second-quarter 2019 Total Avon revenue was
(8)%.
The Company also presents cost of sales, gross margin, selling,
general and administrative expenses, selling, general and
administrative expenses as a percentage of revenue, operating
profit (loss), operating margin, income (loss) before taxes, income
taxes, net income (loss), diluted earnings (loss) per share and
effective tax rate on a Non-GAAP basis. The Company refers to these
Non-GAAP financial measures as "Adjusted." The Company also
presents free cash flow as an additional financial measure for
liquidity. The Company has provided quantitative reconciliations of
the Non-GAAP financial measures to the most directly comparable
financial measures calculated and reported in accordance with GAAP.
See "Supplemental Schedule - Non-GAAP Financial Measures" within
this release for these quantitative reconciliations.
The Company uses Non-GAAP financial measures to evaluate its
operating performance. These Non-GAAP measures should not be
considered in isolation, or as a substitute for, or superior
to, financial measures calculated in accordance with GAAP. The
Company believes investors find the Non-GAAP information helpful in
understanding the ongoing performance of operations separate from
items that may have a disproportionate positive or negative impact
on the Company's financial results in any particular period. The
Company believes that it is meaningful for investors to be made
aware of the impacts of: 1) CTI restructuring initiatives; 2)
impairment loss on assets and other items and 3) one-time tax items
that are not associated with recurring, normal operations ("Special
tax items").
The Special tax items include the impact on the provision for
income taxes in the Consolidated Statements of Operations during
the first and second quarters of 2018 due to one-time tax reserves
of approximately $9 million and
$6 million, respectively, associated
with the Company's uncertain tax positions.
View original
content:http://www.prnewswire.com/news-releases/avon-reports-second-quarter-2019-results-300894460.html
SOURCE Avon Products, Inc.