Revlon Inc (REV) 2018 Q2 法說會逐字稿

Hello, and welcome to Revlon's Q2 Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded, Thursday, August 9, 2018. I would now like to turn the conference over to your host, Eric Warren, Vice President, Treasurer and Head of Investor Relations. Please go ahead.

Thank you, Courtney. Good morning, everyone and thank you for joining the call. Earlier today, the company released its financial results for the quarter ended June 30, 2018. If you have not already received a copy of the earnings release, a copy can be obtained on the company's website at revloninc.com.

On the call this morning are Debbie Perelman, President and Chief Executive Officer; and Victoria Dolan, Chief Financial Officer.

The discussion today might include forward-looking statements that are based on current expectations and are provided pursuant to the Private Securities Litigation Reform Act of 1995. Information on factors that could affect actual results and cause them to differ materially from such forward-looking statements is set forth in the company's SEC filings, including its Q2 2018 Form 10-Q. The Company undertakes no obligation to publicly update any forward-looking statements, except for the company's obligation under the U.S. Federal Securities Laws.

Remarks today will include a discussion of certain GAAP and non-GAAP results. Consistent with past reporting practices, non-GAAP results excludes certain nonoperating items that are not directly attributable to the company's underlying operating performance. These adjusted measures are defined in the earnings release and are also reconciled in the financial tables at the end of the release. Please also note that certain amounts provided throughout this call have been rounded.

The call today should not be copied or recorded.

And with that, we'll turn the call over to Debbie.

Thank you, Eric. Good morning, everyone. Thank you for joining the call.

Before we get into business performance, I want to take a few minutes and share my thoughts and observations on stepping into my new role and taking leadership of the company.

Unlike many new CEOs, I am not new to the company. I have worked in and with Revlon in different capacities for more than 20 years and believe this is a great company. We have world-class talent who are committed to being leaders and innovators who drive the future of beauty.

Revlon and Elizabeth Arden are both company of firsts, and I believe that our combined company will reclaim its leadership position for sustained long-term growth. I believe we have the tools to succeed in the modern beauty world, which is an industry that is both growing and transforming. We have iconic brands in our portfolio and talented and passionate people who are committed to innovation and delivering the best products to consumers.

I am confident in our digital transformation strategy across all of our brands and platform and know that it will propel us to capture leadership position where we should be winning.

Our strategy focuses on strengthening our brand and enhancing the avenues through which we communicate and connect with our consumers. [We're focused on] ensuring total availability of our product where the consumer shops, both in the brick-and-mortar world and online. In doing this, we are building strategic capabilities and partnership to position the company to win over the long term. I have confidence in our brand to succeed in the market and we have seen positive signs.

In the second quarter, the Elizabeth Arden brand as well as our Portfolio brand have experienced growth of approximately 5% and 3%, respectively, in the quarter. Within the Portfolio segment, our Almay and CND brands were up approximately 40% and 36%, respectively. Additionally, sales from e-commerce for Revlon color cosmetics grew approximately 30%. We are also experiencing 46% growth in China as well as 35% growth in Travel Retail. There is a lot of work to be done, but with our talent as well as industry expertise, we have a winning combination.

We are transforming the company with many initiatives working in parallel. We have upgraded executive talent to build leadership in areas that are going to be critical in the journey ahead, including e-commerce, digital marketing as well as data and analytics. We recognize the dynamics that play in our industry and across the market with the increase of e-commerce and the migration of media consumption to the digital mobile space. We are moving quickly and implementing our comprehensive digital transformation where we have assembled the technology, processes and the right level of talent and bandwidth to build capabilities that are of critical importance now and in the future. We have set up an internal incubator to nurture new initiatives as well as an internal agency, the Red House, which will be our internal center of excellence for content creation as well as drive cost efficiency. Our focus is on supporting our existing brands as well as nurturing new ones. An example of this is our recent launch of Flesh, which has generated a lot of excitement. These changes open the door for our iconic brands to refresh their connection with the consumer and unlock the potential for growth.

In addition, as we execute on our strategy, we are consistently focused on enhancing our business practices, streamlining our processes and controlling our cost. Since becoming CEO in May, I've already identified ways to reduce our cost structure for the rest of the year and going forward.

As we build for the future and enhance our business operation, I also wanted to update you on our progress recovering from the SAP supply disruptions that affected us in first quarter and into second quarter. We have resolved the fundamental issue and our plan is back to producing at greater than 3 SAP levels. Sales have seen recovery in second quarter in North America, with other markets following as the products reach them.

I am excited and honored to be taking the leadership position at this point in time. I believe that our transformation strategy is taking hold, both within our company and with our consumer. I'm looking forward to the months ahead.

Now I would like to turn the call over to Victoria to review our second quarter results.

Thank you, Debbie, and good morning to everyone on the call.

Before covering our business results, I wanted to highlight a number of predominantly onetime significant items, which impacted our business in the quarter. First, there was a negative sales impact of approximately $30 million or $20 million in gross profit from our SAP supply disruption at our Oxford, North Carolina manufacturing facility. Second, we incurred $23 million in costs associated with the remediation plan for the SAP supply disruptions. Third, we incurred a $20 million charge, of which $19 million was noncash, associated with the reacquisition of certain Elizabeth Arden trademark rights. And fourth, we had a foreign exchange loss of $20 million versus a gain of $9 million in the prior quarter, resulting in a $30 million swing. Ignoring the foreign exchange loss and the onetime cost, net sales would have been down slightly and operating profits flat year-over-year.

Now starting with total company results. Net sales for the second quarter of 2018 were $607 million, a decline of 6% on an as-reported basis from the prior year quarter. We experienced net sales decline in our Revlon and Fragrances businesses, offset by net sales growth in our Elizabeth Arden and Portfolio segments. The overall sales decline is attributable predominantly to the knock-on impact from our SAP related disruptions in the Oxford plant, which we estimate to have driven a loss of approximately $30 million in sales during the quarter, predominantly in our international operation. Excluding the approximately $30 million of lost sales associated with the SAP-related disruption, our as-reported net sales would have been only slightly down in the quarter.

Next, our general and administrative expenses were higher in the quarter due to higher spend levels related to new permanent wall displays as we continue to focus on improving the consumer experience, and increased distribution cost driven by our growth in Asia as well as negative foreign exchange, which drove a $6 million impact in the period, partially offset by cost savings.

We remain deliberate in our choices around building capabilities, especially in digital and e-commerce, as well as investments in our growth markets, particularly Asia. We remain focused on cost control and have seen a reduction in our year-to-date base overhead costs.

In addition, in working with Debbie, and as we progress through the transformation of our business and the optimization of our organization and operation, we are focused on opportunities for cost reduction across the business.

As-reported operating loss for the quarter was $58 million compared to operating income in the prior year quarter of $5 million. Included in our as-reported results was a $20 million loss, of which $19 million was noncash related to reacquiring certain Elizabeth Arden trademark rights. We're excited to reacquire this iconic Arden trademark and see this as an opportunity for the company and the brand going forward.

On an adjusted basis, our operating loss was $5 million for the quarter compared to operating income of $20 million -- $22 million in the prior year period, driven by the decline in net sales, coupled with the increase in selling, general and administrative expenses previously discussed. As-reported net loss for the quarter was $123 million as compared to our as-reported net loss in the prior year quarter of $37 million. In addition to the other drivers discussed previously, the higher net loss is attributable to unfavorably impact of foreign currency fluctuations, offset by a tax benefit of $3 million as compared to a $12 million tax provision from the prior year period.

Finally, adjusted EBITDA was $37 million for the current quarter compared to $62 million in the prior year quarter, and as noted, was primarily negatively impacted by the net sales reduction. We estimate that the net sales decline of $30 million due to the Oxford slowdown discussed previously negatively impacted our current quarter's adjusted EBITDA by approximately $20 million assuming our 60% adjusted gross margin in the quarter.

Let me now provide a further update on our SAP implementation. As you know, our production capabilities in our Oxford, North Carolina, production facility was severely affected starting early April and were reestablished back to pre-SAP levels during the month of April. During that time, inventory levels in Revlon distribution centers and with our major retail and distribution partners, both domestic and international, were depleted.

Since then, we've been rebuilding these inventory levels, and service levels have significantly improved. The need to cycle production through several thousand SKUs is the primary driver for the recovery duration, and we continue to see improvement with each successive month.

As many companies have experienced, ERP implementations are extremely complex. Since identifying the production issues, we have had dedicated internal teams consisting of operations, information technology and finance, along with external business process experts involved in scrutinizing our process and system changes, and are completing the final phases of improvement. We have accomplished a tremendous amount since the implementation and have continued to learn and evolve our internal processes and procedures as we move forward. We are confident that SAP will drive a stronger supply chain, which will allow us to better serve our customers through service efficiency and support improved decision making.

Next, I would like to turn to our segment results. Our Revlon segment net sales in the quarter of 2018 were $258 million, which represents an 11% decline on an as-reported basis. This decline was due mainly to the service level disruptions in Oxford, which primarily impacted our international operations and resulted in the segment profit decline of 32% primarily due to the lower net sales.

For Elizabeth Arden, net sales in the second quarter of 2018 were $106 million, representing a 5% increase on an as-reported basis. This improvement was mainly driven by higher net sales of Elizabeth Arden skin care products, principally in our international territories. Elizabeth Arden segment profit declined primarily due to higher distribution cost associated with geographic mix and brand support expenses.

Net sales for our Portfolio segment were $148 million in the second quarter of 2018, an increase of 3% on an as-reported basis. This increase was primarily driven by higher net sales of Almay Color Cosmetics following the relaunch of the brand as well as higher net sales of CND nails products as a result of Shellac and Vinylux nail polish innovation.

Portfolio segment profit declined as a result of higher brand support expenses, which was partially offset by the higher net sales previously mentioned.

Finally, net sales of our Fragrances segment were $95 million in the second quarter of 2018, representing a 15% decrease on an as-reported basis. This decline was driven by the loss of certain licenses in 2018. As a result of cost reductions associated with in-sourcing production capabilities, Fragrances segment profit increased by 39%, which was partially offset by the lower net sales previously mentioned.

Turning lastly to liquidity. Free cash flow used in the first 6 months of 2018 was $220 million compared to $179 million in the prior year. The decline in free cash flow was primarily driven by the lower net sales and higher interest payments, partially offset by quarter-over-quarter differences in working capital changes and the decline in capital expenditures. Year-to-date, through the second quarter of 2018, we spent $30 million in capital expenditures and $36 million in permanent displays.

As of June 30, the company had approximately $107 million of available liquidity consisting of $82 million of unrestricted cash and cash equivalent, $35 million under our 2018 senior line of credit from MacAndrews & Forbes and $7 million in available borrowing capacity under the revolving credit facility less float of $17 million.

In July, we were pleased to be able to further increase our liquidity position and entered into a foreign-based asset-backed euro-denominated $77 million term loan facility. Including available cash from the foreign-based term loan, as of July 31, the company's available liquidity was $164 million, consisting of $81 million of unrestricted cash and cash equivalents, $50 million of available borrowing capacity under the 2018 senior line of credit as well as $47 million in available borrowing capacity under the revolving credit facility less float of $14 million.

I will now turn the call back over to Debbie for closing comments before the Q&A.

In closing, we believe in the power of our brands and are encouraged by the consumer's response to our digital transformation initiatives and new advertising campaign. In addition, we have identified opportunities to both optimize our business practices and control cost in the remainder of the year and going forward.

With most of the SAP disruption behind us, we are focused on realizing the opportunities in our business and building for the future, including growing our brand, better serving our customers and our obsession with our consumer.

With that, we will now open the call for questions.

(Operator Instructions) Our first question comes in from the line of Grant Jordan calling from Wells Fargo.

I have a couple of questions. So first, on the SAP. Do you expect any more sales or earnings issues going forward? Because as I go back and look at the last transcript, I thought you said the Oxford plant was back to normal production in early April.

Grant, this is Victoria. Thank you for the question. And as we said in the April transcript, yes, we were up to full production capacity, but then after that we had to cycle through the complexity of those SKUs to be able to refill the pipeline and get it delivered to our customers. So we do continue to feel some of those impacts, but we've made tremendous progress in both refilling our pipeline and improving our customer service levels.

Okay. And the way you talked about the lost revenue and profitability, it sounds like the SG&A -- there weren't any -- there wouldn't be any additional SG&A costs associated with those lost sales?

No, no.

Okay. All right. On the SG&A front, I mean the SG&A expenses continue to be pretty high, given the revenue declines. Is that part of your plan, to focus on more cost cuts? Or do you see opportunity there?

I think Debbie and I both talked about our cost structure. And as Debbie talked about, looking at the transformation of our business and driving our brand, we are looking at our operating structure and our cost structure.

Okay. And then last question. Liquidity last year in the third quarter, you burned through about $150 million in cash. Do you feel like you've got the liquidity in place to get through the next 12 months?

Yes, we do. We have evaluated our liquidity position and are comfortable that we have sufficient liquidity to fund our operating needs.

The next question comes in from the line of Karru Martinson calling from Jefferies.

Just a point of clarification. On the trademark reacquisition, how is that a noncash charge? And just could you walk us through the mechanism of what you reacquired there?

Yes. We had an investment in a joint venture, and we basically terminated those assets. And so they -- and then paid a small cash charge associated with that. So we essentially liquidated that joint venture -- our joint venture position.

Okay. And then those just come back to you. All right. And then when you guys talked about looking at the cost structure, looking at the operations, what's the time horizon for kind of getting your hands around the opportunities there? And then what's the magnitude of the opportunity there?

Well, first of all, we don't give forward-looking guidance. And I think as both Debbie and I said, we said that we are -- we should see impact in the second half of the year as well as going forward.

Okay. And in terms of the liquidity position, when you talk about having evaluated over the next 12 months and having the runway there, does that envision tapping some of those add-on facilities that you have built in there? Or do you feel that the existing structure as we are today is sufficient?

We're not going to talk about our financing plans going forward. We've evaluated our liquidity position and feel that it is sufficient for our operating needs.

Okay. And just in terms of new products, you've rolled out Flesh. I mean, is that in all of the new -- all the stores? And then do you have a couple of launches, I think Shoot the Moon and Electric Shock for the second half of the year? Where do we stand on those as well?

So this is Debbie. Thank you for the question. With regards to Flesh, we are in a specific number of Ulta stores. As you may have read, there's tremendous excitement, both in the market and from the retailer around flesh. As you can imagine in this industry, we are always exploring new opportunities for new products to launch in the market to remain competitive.

Okay. And just lastly, in terms of Almay and the relaunch and the repackaging on that front, any update there?

As we stated, we're seeing some momentum on the Almay brand, particularly where we've been able to reset our elevated wall. We've been able to see double-digit lift, so we're optimistic.

The next question comes in from the line of William Reuter calling from Bank of America.

When you were talking about the ERP challenges, you mentioned that you didn't think there would be incremental lost sales of any meaningful size and additionally, no elevated SG&A. Were there any shelf space losses associated with those? Or could it be possible that you would still have to continue to make any payments in terms of vendor reimbursements to your customers?

So let me clear up your first comment, I think what I said was we do continue to feel impact from this. We've made tremendous progress, we have -- we're refilling our pipeline and we are improving our first customer service levels with every passing week, but we do continue to feel -- expect to feel some impact from this.

Okay. So I guess I misunderstood a little bit. I guess in terms of the second portion of the question, would there be any additional vendor reimbursements that you would be paying to your customers? Or do you feel you lost any shelf space?

We didn't talk about any vendor reimbursements. We are working with each of our customers. We have long-standing relationships with those customers and we are working with each of them to manage that relationship and get that -- get our stock back on shelf.

Okay. And then you talked a lot about some marketing costs that you've been spending associated with the relaunches of many of your brands. I guess, would we expect that those marketing expenses would continue at their current levels? Or do you think that they were somewhat elevated due to the launches?

We are always -- this is Debbie. We are always evaluating where we should be investing and what brands we should be investing behind. We made specific decisions to invest in the relaunches of specific brands in the market. And as each opportunity gets put forth within the company, we will evaluate it with the same amount of rigor.

Okay. And then just lastly for me. I think in general, your shelf space in the U.S. for the Revlon brand has been relatively consistent at least according to commentary over the last, maybe, year's earnings calls. Has there been any changes over the last quarter, I guess in light of the -- some of the relaunches that you have there as well?

So we have not experienced any space loss in the last quarter. Our space remains as it has been.

The next question comes in from the line of [Addie Redinsky] calling from Cantor Fitzgerald.

And by the way, congratulations on your Almay relaunch. That's really nice. Just -- can you just offer broad commentary, Debbie, around 2 things? One is potential tariffs and its impact on Revlon, in general? And the second thing is what we're seeing is hypernationalization across the globe and people wanting to buy local and things of that nature, and how you're trying to adapt to that as well?

Yes. Thank you. So as you know, it's an evolving situation with regards to tariff. So currently, we're looking at our plans and seeing how these tariffs can affect us. If we look at specific markets, particularly markets in Asia that are very important to our company, we are evaluating tariffs with regards to how it will be able and how it will enable us to access those markets. So if you -- if we can move on to the second part of your question, which I believe was on nationalization and people wanting to buy more local, correct?

Correct.

So we are always looking at new opportunities in the market. And opportunities which -- where we can enhance our existing brands as well as look for opportunities to either launch new brands or acquire brands. With regard to nationalization and localization, there is absolutely a place for national brands like Revlon and Almay that exist in the market, as well as for what I call smaller brands, such as Flesh. So we are looking to balance the two.

That was more the question, was really more that let's say you live in a country x, they want to buy brands from that country. And it used to be that everyone wanted to buy American stuff. Now if you go to Europe or Asia, they don't necessarily have the same view of American products. Do you brand-in, in different markets under different labels? Or is it always under Elizabeth Arden's titles and Revlon? The question really is also on the international. The only international growth that we saw in this quarter was Elizabeth Arden. I don't know if that really has to do with the SAP conversion or if we're just losing some share. That was really what the question was about.

Thank you, thank you. I appreciate the clarification. So with regards to our company, we do have a number of local brands that exist in various markets. That exist in Europe, that has done well over the years. So there is a focus for us in looking at our strategy in terms of how do we expand the presence of those brands.

The next question comes in from the line of Stephanie Schiller Wissink calling in from Jefferies.

Just wanted to follow up on your comments on marketing. I thank you talked about a shift in spend towards digital and maybe some social as well, but if you can maybe give us a sense of what percentage of your overall marketing budget today is within those channels? And how do you see that evolving over the course of the next 12 to 24 months?

So as you know, in the market today, in the industry itself, there has been a tremendous shift from what I call traditional media into digital, including social. That is part of our strategy, but we're not going to provide percentage of shift today. But know that based on our strategy to continue to invest in our capabilities with regard to digital, it remains a focus for the company.

Okay. That's helpful. And Debbie, should we think about it at some point being a disproportionate component, the combination of social and digital oversizing the legacy? Is there a tipping point that we should be mindful of just in terms of efficiency of that spend?

I don't think so. We're always looking for efficiency of spend. As I'm sure you know, in this competitive industry, it can be a differentiator. But with regards to us, we're always evaluating what's going to be most effective in reaching our consumer.

Okay. And then just a second question on Flesh. I think you mentioned it's in a specific number of doors. I'm wondering if you're willing to give us that number and how we should think about the cadence of rollout within Ulta. How long is that exclusivity? And then any initial learnings from the launch? This idea of shade range and unique positioning seems to be something that is -- we're seeing across a number of brands. And curious if you can just share with us a little bit about some of the insights from the launch? And whether you're feeling some competitive pressure around that idea of inclusivity and shade range?

Thank you for the question. We are very excited about the launch of Flesh. As you know, we have seen a lot of momentum in the market with regard to the brand. What's really resonating with the consumer, we believe, is the fact that we're speaking to inclusivity, and we've launch with such a large shade range on the foundation as well as very specific ancillary products. So while we're -- I'm not going to speak specific numbers today, we continue to watch the brand. It's been in market for now about 6 weeks, so the learnings are pretty early. But what we do see working is the partnership with Ulta as well as our ability to reach the consumers on digital.

That's helpful. And then last question is just on Travel Retail and China. Some really big gross numbers there. I think you mentioned China 46%, and Travel Retail 35%. In both cases, those growth rates significantly outpace the consumption levels. I'm curious if you could talk about distribution gains and where you are across your portfolio in terms of penetrating the China market and the Travel Retail channel?

So as we've spoken about, China -- both China and Travel Retail are both markets where we continue to focus on as our main strategy and executing our strategy with regard to e-commerce in China as well as growth in the Travel Retail market.

And anything more you can talk about just in terms of the portfolio distribution? Are you taking the entire portfolio within Travel Retail or China? Where are you in terms of the progress across the portfolio of brands that you own?

So as you may remember, currently today, in China, we primarily sell Elizabeth Arden.

Okay. And is it true as well for Travel Retail, leading with Elizabeth Arden as well?

Correct. So Travel Retail, we lead with Elizabeth Arden. Revlon has a presence in Travel Retail, as does Fragrance.

The next question comes from the line from Mary Gilbert calling from Imperial Capital.

I just wanted to follow up on some of those questions. One, with regard to Flesh, do you do -- what is the timing of the exclusivity there? And then number two, are you planning to do any kind of events like in-store events to drive excitement, especially in some major markets? Sort of just thinking about what KKW and Kylie are doing here in Los Angeles, they're driving a lot of events and bringing in a lot of consumers that way. Is there an opportunity for you to do that?

So we have a very good partnership with Ulta on the Flesh brand, and we have a very what I'm going to call a fulsome marketing calendar with them, which includes events. So yes, it is on the horizon. With regards to the term of exclusivity, we're not going to provide that information today.

Okay. And then also going back to the growth opportunities, particularly in China. So Revlon is only being sold through T Mall in Hong Kong going into China. So I thank you mentioned that online opportunity, is there an opportunity to take it directly into China? And where do we stand with getting approval for those products to be sold directly into China? And is that part of your strategy?

Thank you for the question. As you know, the market in China is growing and there is opportunity for brands such as Revlon in the market. As you said, we are sold on T Mall, which is a proof of concept that Revlon is being received well in China. We are also always looking and exploring opportunities to launch the brand in China. And we have begun exploring the registration process for our product.

Okay. Is that something more like a 2019 event, do you think?

I'm not going to comment on that today. When we have additional news, we will share it.

Okay. And then can you talk about the level of innovation as we look at the back half of the year, and the continued impact of SAP? It sounds like clearly, we're going to have an impact in Q3. I don't know if there's a way to get an idea of the magnitude of the impact that we're looking at in Q3? And just, I guess, when we see line of sight of being balanced in terms of inventories, will that be reached by the end of the year? And then just how you look at back-half innovation and the opportunities there across the portfolio?

Okay. Thank you for the question. And as we said before, we're not going to give forward guidance. I will reiterate what I said before, is that we continue to feel the impact, but that we are making tremendous progress on both refilling our pipeline and improving our customer service levels. And we are seeing week-to-week improvement.

Okay. And then on the innovation side?

So with regards to innovation for second half, we have integration -- innovation across the portfolio from Arden to Revlon to Almay to Fragrance. So that's hitting the market now.

Our final question comes in from the line of Tom Radionov calling from Corre partners.

Debbie, welcome. I have a question for you, and then a few quick questions for Victoria as well. So Debbie, I guess my question for you is, as you think about the strategy going forward, should we think of it as being sort of revolutionary in nature? Where we should expect to see a lot of changes to the portfolio and the way you go to market? Or is it more likely to be, I guess, evolutionary in nature where you're going to, I guess, maintain some of the strategies developed under the prior management teams, and sort of use that as a starting point? So and as you answer the question, I guess also I'm kind of curious whether you have thought about asset sales and sort of the nature of the portfolio as it stands today? And also any major launches? I think you mentioned a couple of different launches, I'm just kind of curious when you sort of think about Revlon versus Arden versus some of the other products out there, if there is a focus on a few of these products, specifically as we think about the second half of the year.

Well, thank you for your question. So with regards to the strategy, our strategy remains very focused on investing in our iconic brands as well as investing in our digital transformation, which includes digital marketing as well as e-commerce. As mentioned before, we are focused on some specific markets that we're looking for growth, Travel Retail and China, as well as some other markets in Asia. So I don't know if I would characterize it as revolutionary or evolutionary, but we're sticking very focused to the strategy that we have laid out.

And obviously, Flesh is very exciting based on the early feedback. Do you have any other products similar to Flesh in the pipeline? Or was that sort of the major launch for this year in terms of a new product?

So I'm not going to focus on future projects today in terms of announcing them. But what I will say is that we are always exploring new opportunities for our existing brands as well as the potential of launching new ones.

Okay. Understood. And then, Victoria, for you. So quick question on EBITDA. I think you already answered this, but basically, the bottom line I think is you were saying $37 million in reported EBITDA. Presumably, the impact from the lost sales would have been a $20 million incremental EBITDA, had you been able to actually realize those sales. So presumably, I think the $7 million number is the right number for this quarter had it not been for Oxford. Is this the right math?

That's correct. So $57.5 million this quarter versus the same quarter last year at $61.5 million.

Let me say thank you to all of you who have joined the call today and a special note to our team members around the Revlon world who are listening. We appreciate all of the efforts you make every single day. And although we have a lot of work ahead of us, we are truly excited about our future and the opportunity we have to grow our business together. Thank you.

This does conclude the conference call for today. Please disconnect your lines, and thank you for participating.