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Revlon, Inc. (NYSE:REV)

Q1 2013 Earnings Call

April 25, 2013, 09:30 am ET

Executives

Elise Garofalo - SVP, Treasurer & Investor Relations

Alan Ennis - President & CEO

Chris Elshaw - EVP & COO

Steven Berns - EVP & CFO

Analysts

Karru Martinson - Deutsche Bank

Connie Maneaty - BMO Capital Markets

Grant Jordan - Wells Fargo

Connie Maneaty - BMO Capital Markets

Operator

Good morning ladies and gentlemen and welcome to Revlon’s First Quarter 2013 Earnings Conference Call. At the request of Revlon, today’s conference call is being recorded. If you have any objections you may disconnect at this time. (Operator Instructions)

I would now like to turn the call over to Ms. Elise Garofalo, Revlon’s Senior Vice President, Treasurer and Investor Relations. You may begin Ms. Garofalo.

Elise Garofalo

Thank you, Cynthia. Good morning, everyone, and thanks for joining today’s call. Earlier today, we released our results for the first quarter ended March 31, 2013. If you’ve not already received the copy of the earnings release, you can obtain one on our website at revloninc.com.

On the call with me this morning are, Alan Ennis, Revlon’s President and Chief Executive Officer; Chris Elshaw, Chief Operating Officer Steven Berns, Chief Financial Officer.

Before I turn the call over to Alan, I’d like to remind everyone of a few things. First, our discussion this morning might include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act. Information on factors that could affect the company’s results from time-to-time and cause them to differ materially from such forward-looking statements is set forth in the company’s filings with the SEC, including our 2012 Form 10-K and our 2013 first quarter 10-Q which we filed earlier this morning.

Next, our remarks today will include a discussion of adjusted EBITDA and free cash flow, both of which are non-GAAP measures. These non-GAAP measures are defined in the footnotes of our release and are also reconciled to their most directly comparable GAAP measure in the financial tables at the end of our release. And finally as a reminder our discussion this morning should not be copied or recorded.

With that, I’ll turn the call over to Alan.

Alan Ennis

Thank you, Elise, and good morning everyone. As we have discussed for some time our strategic goal is to profitably grow our business. We accomplished this by building our strong brands, developing our organizational capability, driving our company to act globally, pursuing growth opportunities and improving our financial performance.

In the first quarter of 2013, we grew our net sales by 2.1% primarily driven by Revlon color cosmetics and our Pure Ice and SinfulColors brands. With respect to our acquisitions, SinfulColors performed very well during the quarter and we are on-track with the integration of a more recently acquired Pure Ice brand which also performed well this quarter.

From a regional perspective, net sales increased in the quarter in the US and Latin America, and Canada regions while we saw some softness in Asia Pacific and EMEA.

With regard to our brands, we believe the success in the marketplace is driven by delivering innovative high quality new products supported by effective brand communication and superb in-store execution. Our continued emphasis and focus on this approach is of the utmost importance to our objectives of driving profitable growth. We have recently introduced a number of successful new products which Chris will touch upon later in the call and we increased marketplace support behind our brands during the quarter.

Also in the first quarter, we improved our capital structure by refinancing our senior notes and amending our term loan meaningfully reducing interest rates on both facilities and significantly extending the maturity of our senior notes to 2021.

Also of note, Moody’s upgraded our corporate credit rating. We remain focused on executing our business strategies to deliver topline growth and highly competitive margins overtime.

So with that, I will hand the call over the Chris who will talk about our marketplace performance.

Chris Elshaw

Thank you Alan and good morning everyone. Today, I will review our net sales performance by region and by brand, excluding the impacts of changes in foreign currencies.

Total company net sales in the first quarter of 2013 were $331.9 million, an increase of $7.1 million or 2.1% versus the first quarter of last year. This increase was primarily driven by high net sales of Revlon color cosmetics and SinfulColors, plus the inclusion of Pure Ice, partially offset by lower net sales of Almay and Revlon ColorSilk hair color.

In the United States, net sales increased $7.4 million or 4% primarily driven by high net sales of Revlon color cosmetics and SinfulColors plus the inclusion of Pure Ice, partially offset by lower net sales of Almay and Revlon ColorSilk hair color. Net sales in the US region grew in the first quarter of 2013 excluding the results of Pure Ice.

In Asia Pacific, net sales decreased $1.1 million or 2% primarily due to lower net sales of Revlon color cosmetics in China, partially offset by higher net sales of Revlon color cosmetics in Japan and the introduction of SinfulColors in Australia.

With respect to China, consistent with the second half of 2012, the rate of growth in the economy slowed in the first quarter of 2013 and we also saw slowdown in the rate of consumption. Inline with that and while also proactively reducing inventory with our distributors, our net sales in China were low in the quarter. We continue to manage this business closely, working with our retail partners and focusing on the execution of our marketing plans.

Moving on to Europe, Middle East and Africa, net sales decrease $1.9 million, also by 1%, primarily due to lower net sales of both Revlon color cosmetics and other beauty care products in France. As we have previously discussed, in France we are in the process of completing our restructuring and exiting our manufacturing facility. In the UK, we continue to be very pleased with the strong performance of the Revlon brand proven marketplace perspective.

In Latin America and Canada, net sales increased $2.7 million or 6.1% primarily due to high net sales of Revlon color cosmetics throughout the region and higher net sales of other beauty care products in Argentina. Venezuela was not a driver of the net sales increase year-over-year as higher selling prices were largely offset by lower sales volumes.

With respect to Venezuela, as you know it represents approximately 2% of our total company net sales. The country is going through a period of uncertainty as well as strict currency controls, where our access to US dollars has been virtually eliminated since February. Our current focus is to manage the business such as Revlon Venezuela is only taking delivery of imported products for which you can pay in US dollars. We are continuing to monitor the local currency market developments closely.

Now moving on to our performance by brand; starting with Revlon color cosmetics, net sales increased as compared to the prior year. With respect to notable product performance in the marketplace in the face and eye segments, we have recently introduced new products building upon our PhotoReady franchise. In face, our PhotoReady BB Cream was recognized in Oprah Magazine’s Spring Awards for makeup as one of the fresh new formulas for flawless skin; when launched, this BB Cream is performing well in the marketplace.

In eye, we introduced PhotoReady Primer, Shadow and Sparkle, a palette featuring a primer for highly pigmented shadows that can be used wet or dry and the Sparkle top coats which allows for limitless eye looks in one convenient package. To-date, when launched this product is performing well in the marketplace.

Moving on to the lip category, we continue to be pleased with our ongoing success across several franchises. For example, we recently expanded our ColorStay franchise with Ultimate Suede Lipstick which contains a velvety soft formula that truly achieves the ultimate combination in long way by giving lips instant moisture as well as all day color. The consumer obviously agrees with our assessment as ColorStay Ultimate Suede Lipstick has been exceptionally well received in the marketplace.

In addition to new product introductions in lip, our core Super Lustrous franchise which has been a main stay of Revlon continues to be a highly desirable product amongst our consumers. Recently, Revlon Super Lustrous lipstick was recognized in Teen Vogue’s Readers Choice Awards as The Best Lipstick. We are proud of this franchise’s longevity and the ability to attract new generation of consumers. We are also looking forward to the re-launch of Super Lustrous lip gloss and new Super Lustrous lipstick shades later this year.

Finally in nail, most recent new product is Revlon Nail Art, a collection of nail shades and art trends offered in a unique dual-ended package containing everything needed to achieve the latest nail designs at home. When launched Revlon Nail Art is performing very well in the marketplace.

Turning now to Almay, net sales decreased year-over-year primarily due to its performance in the US. Almay remains a priority focus area for improvements, as we continue to be dissatisfied with the marketplace performance of the brand. As you know from prior calls, we continue to work on a number of actions to improve Almay’s performance including modifying our brand support activity with increased advertising and promotional support and refining our brand positioning which includes improving our instill presentation through graphics packaging and merchandising, all of which are in progress. The critical component of our brand success is the introduction of successful innovative new products. Next month we are launching a number of new Almay products including an exciting initial launch by the Almay brand into the lip category.

With Almay coloring care liquid lip balm, which is a new type of lip balm in a liquid form that provides hydration as well as color in the range of 10 [entering] shades. Also new is our CC cream, which provides skincare benefits as well as color correction, along with the instantly flawless coverage. Almay will be one of the first CC creams introduced in to the mass market. This launch will be under our core Almay Smart Shade franchise. And lastly we are extending our highly successful eye makeup removal business by bringing new benefits which we believe further differentiates our products offering in the marketplace. The entire range will also benefit from a fresher looking feel as we introduce new packaging. We continue to monitor and refine our actions in order to profitably grow the Almay brand over long term.

Moving on to women’s hair color; net sales of Revlon ColorSilk declined as compared to the same period last year; however ColorSilk continues to perform well despite softer demand in the US category overall. To date, we are pleased with the recent introduction of our new Revlon Luxurious ColorSilk Butter Cream, an extension of our Revlon ColorSilk product line. In Revlon beauty tools net sales increased year-over-year. In 2012, our new products performed exceptionally well and we are off to a similar start in 2013 with our new product performance, as we continue to bring exciting and innovative new products to the markets. Consistent with our comments in the past, the beauty tools category remained soft. However we continue to maintain a strong leadership position in the US and Canada. And finally, since acquiring SinfulColors two years ago, we have gained new distribution not only in the US but also in a number of other key international markets such as Canada, South Africa, Australia and the UK. We are very pleased with the net sales growth of this brand. Now I will turn it over to Steven to walk you through the rest of our financial results for the quarter.

Steven Berns

Thank you, Chris. Good morning everyone. Starting with gross margin performance, gross margin in the first quarter of 2013 was essentially flat year-over-year at 64.8% versus 65% in the first quarter of 2012. The first quarter of 2013 was impacted by a few items. First, unabsorbed fixed costs related to the previously announced exit of our manufacturing facility in France which had an unfavorable impact of two-tenths of a percent or $800,000; and second the impact of foreign currency fluctuations which had an unfavorable impact of one-tenth of a percent or $4.3 million. These unfavorable impacts on gross margin were largely offset by product mix which had a favorable impact on gross margin of two-tenth of a percent or $700,000. SG&A was a $167.5 million in the first quarter of 2013 as compared to $170.7 million in the same period last year. The $3.2 million decrease is primarily attributable to the following items. In the first quarter of 2013, we benefited from an $8.3 million gain on insurance proceeds from the settlement of our inventory claim due to the 2011 fire in Venezuela. This compares to the first quarter of 2012 which benefited from $1.1 million of income from insurance proceeds for business interruption losses related to the Venezuela fire.

SG&A in the first quarter of 2013 also benefited from $2.2 million of favorable changes in foreign currency fluctuations. These benefits were partially offset by $2.9 million of higher advertising and promotional expenses and $1.6 million of higher general and administrative expenses primarily due to higher incentive compensation and higher insurance expenses. SG&A for the first quarter of 2013 included $1.1 million of higher incentive compensation expense related to a modification to the structure of the company’s long-term incentive plan to better align the plan with the company’s long-term performance. While the new structure does not change the amount of the potential annual incentive award, the transition is expected to result in higher expense in 2013 and 2014 as compared to 2012. In 2013, this incremental expense is expected to be approximately $5 million and in 2014, the incremental expense is expected to be approximately $3 million. The company expects no additional expense related to the transition to the new structure after 2014.

Operating income in the first quarter of 2013 was $47.3 million compared to $44.3 million in the same period last year and adjusted EBITDA was $64.3 million compared to $60 million in the same period last year. As there were some meaningful currency moves in the first quarter of 2013, compared to the first quarter of 2012, let me summarize the impact of these for you. The total unfavourable impact on operating income in the first quarter of 2013 was $2.1 million which included net sales which were negatively impacted by $5.9 million; gross profit which was negatively impacted by $4.3 million; and finally SG&A which was positively impacted by $2.2 million.

Moving on to interest expense, interest expense including dividends on preferred stock decreased $1.2 million to $20.4 million in the first quarter of 2013, primarily due to lower interest rates as a result of our senior notes referencing and bank term loan amendment. Related to the company’s first quarter 2013 refinancing activity we recognized an aggregate loss on the early extinguishment of debt of $27.9 million. As Alan indicated earlier, these transactions improved our capital structure by meaningfully reducing interest rates and extending the maturity of our senior notes to 2021. Moving on to taxes, the provision for income tax was $1.2 million in the first quarter of 2013, compared to $11 million in same period last year. The decrease in the provision for income taxes was primarily attributable to the $27.9 million loss on early extinguishment of debt. Cash paid for income taxes in the first quarter was $2.7 million compared to payments of $3.4 million last year. Net loss in the first quarter of 2013 was $6.9 million or $0.13 per diluted share compared to net income of $8.5 million or $0.16 per diluted share in the same period of last year.

Moving onto cash flows; net cash used in operating activities in the first quarter of 2013 improve by $3.5 million to a use of $16.9 million. The first quarter of 2013 as compared to 2012 benefited from lower premium payments related to certain of the company’s multi year insurance programs, lower pension contributions and other favorable changes in working capital. These improvements were partially offset by accelerated payments of interest expense due to our refinancing activities, higher incentive compensation payments, and restructuring payments related to our September 2012 restructuring plan. As a general reminder; with respect to operating cash flow the timing of cash flows from working capital can very from quarter-to-quarter based on the number of factors. We continue to closely manage our key working capital accounts including receivables, payables and inventory.

On the liquidity front, our unutilized borrowing capacity and cash on hand as on March 31, 2013 was $242.2 million comprised of a $112.5 million and available cash and $129.7 million available under our revolving credit facilities. Our revolver was undrawn at the end of the quarter and we had $10.3 million of standby letters of credit issued under this facility.

Now moving on to the balance of 2013, consistent with our historical practice I'm going to provide certain 2013 cash flow information, none of which has changed from the prior guidance we gave on our last earnings call. Capital expenditures are expected to be approximately $25 million. Permanent display expenditures are expected to be approximately $50 million. Pension plan contributions are expected to be approximately $20 million. And lastly, cash paid for income taxes is expected to be approximately $20 million.

This concludes our prepared remarks and we would now like to open up the call for your questions. Operator, please prompt the participants for questions.

Question-and-Answer Session

Operator

(Operator Instructions) We will take our first question from Karru Martinson with Deutsche Bank. Please go ahead.

Karru Martinson - Deutsche Bank

Good morning. When we look at the top line sales in the US, how much was Pure Ice contributing to that 4% gain?

Alan Ennis

So we don't talk about our performance specifically by brand as you know at the sales line. I can tell you that the US did grow the top line excluding Pure Ice.

Karru Martinson - Deutsche Bank

And when we kind of look at the repositioning and the new products coming from Almay, this is certainly something that's been you’ve been worked on for couple of quarters now. When do we feel kind of we will get traction there?

Chris Elshaw

Well, Karru, obviously we are not going to forecast when is. What I can tell you is we are extremely focused on making the right moves to drive profitable sales growth over time. So those areas of focus on things that we know build cosmetic brands by getting the right mix and level of advertising promotion and we monitor that very closely and make adjustments in terms of our launches in the marketplace. The instill experience and an experience the consumer has with the products at home which is why we are making all the changes to packaging and instill graphics.

And then new products as I said, the new products we have coming are important as our re-entering to the lips segment with a new form of lip balm. There is one of the first CC creams and mass that is coming to the US marketplace and then we are building on upon the successful eye makeup remover. So we are making all these changes in a very (inaudible) way and the brand has been successful over time in the marketplace. We've had great products like Smoky-i, Intense i Smart Shade. So we are focused on replication of that.

Karru Martinson - Deutsche Bank

And just lastly a number of retailers you are targeting and others have talked about the difficult first quarter whether it’d be weather related the payroll tax increase, delayed tax returns, I mean how much do you feel that you are fighting somewhat of a headwind here in the first quarter that will abate as we go forward?

Chris Elshaw

Well, I'm sure they are talking about their businesses overall. Of course you know we're really focused on the cosmetics category which grew at a reasonable rate in the first quarter and we continue to compete very strongly in that category.

Operator

We will take our next question from Connie Maneaty with BMO Capital Markets. Please go ahead.

Connie Maneaty - BMO Capital Markets

Good morning. Okay, on the change to your incentive plan, can you talk about how the dynamics work here? So there's incremental expense of $5 million this year and $3 million next year, but no change to the potential award. So, exactly what's going on, what’s the plan?

Steven Berns

So Connie our prior long-term incentive plan was based on a single year’s performance with the payout over three years. The new structure is based on cumulative results of three years of performance for which a payout is then made in a single payment at the end of the third year. So as we transition from the prior plan, which once again was a single year’s performance paid out over three years, that’s the prior plan to the new plan, the cumulative result payable after three years, the result is higher expense as we're still expensing the final two years of the prior plan as well as the expense related to the new plan.

So as we stated, the new structure doesn’t provide additional potential annual incentive awards to employees. However it just has this expense as it relates to the old plan while still expensing the new plan. And there is no impact on the cash flow to the company during this period. It's consistent with the expected cash flows that we had in 2012 related to this plans.

Connie Maneaty - BMO Capital Markets

Okay. And then on the insurance related matter, they’ve been really kind of rolling ever since the fire in Venezuela. So the gain that you booked in the quarter, is that a taxable event or does the whole thing dropped the earnings?

Steven Berns

At this point in time, the expectation is that $8.3 million that we reflected in the P&L drops straight to earnings.

Connie Maneaty - BMO Capital Markets

Okay. And should we consider that to be, because in the past you have had payments that protected your profit and sort of may give hold based on what you would have earned in Venezuela have there not been in fire. Is this payment the end of the insurance, is it the end of the insurance settlements?

Steven Berns

So that there were two, go ahead.

Connie Maneaty - BMO Capital Markets

If you could answer that, that would be helpful.

Steven Berns

Okay. So there are two claims effectively, when claiming or it's not necessarily an insurance selecting or so. Two claims, one is we got an inventory loss and we also had a property and business interruption loss. So the property in business interruption is a single if you would claim and the other claim is the inventory claim. In the first quarter of 2013, the settlement that was reached would be insurance carry was just around the inventory claim. And so that’s what the $8.3 million recognition relates to.

In the period prior, where we had recognized business interruption losses that was during the first approximately 15 months subsequent to the fire, so that ended at the end of the third quarter of 2012. And so we get experience business interruption losses. As we show in our 10-Q, we have $4 million which we have received which is deferred on our balance sheet until such time as there is a final settlement and resolution of the property and business interruption claim. We don't know the timing of that and final amounts; it just is a pending insurance claim.

Connie Maneaty - BMO Capital Markets

Okay. So what's business like in Venezuela, do you have a building, are you importing, I mean a lot of times gone by so?

Alan Ennis

Yes. So we rented offices there Connie. We are importing products from outside the country, but as I said, we are only importing product for which Revlon Venezuela can pay for in U.S. dollars and that's what they rely upon the currency markets in order to be able to import business. Clearly as you know in the country there is lot of shortage on shelves of products, so the issue is more about getting products and than been able to selling once. Now of course you got to remember also in the context of total Revlon it’s only 2% of net sales.

Connie Maneaty - BMO Capital Markets

Okay. And if I could ask one final question. In China, how much inventory do you believe is out with distributors and is there a lot to work down or do you think you are fairly balanced?

Alan Ennis

Yeah, our inventory is are fairly close now to what we understand to be complex stage, so as I say we took out inventory during the first quarter, so we are pretty close to where we think we have to be at this stage.

Operator

We will take our next question from Grant Jordan with Wells Fargo. Mr. Grant, your line is open; please check your mute button.

Grant Jordan - Wells Fargo

Sorry about that. Good morning. Thanks for taking the questions. Just for the high level, it seems like you guys ended the year with lot of momentum in your business and Q1 was a relatively easy comp, up against last year, so I was just trying to really figure out like how the business perform relative to our expectations and did you see any sort of slow down in market share?

Alan Ennis

Grant, a couple of things, yes certainly we ended 2012 with a lot of momentum. And as you know well we don't provide guidance. Our strategic goal is to drive profitable growth over time and do so at highly competitive margins and we continue on that path. That revolves around beginning the right products to the marketplace, effectively communicating with the consumers, making sure that we are spending appropriately and as I mentioned in the first quarter we did increase our marketplace support behind the brands in the first quarter and then executing very effectively with retailers. We are also looking at growth opportunities. We are looking at expanding our existing portfolio of brands into new geographies and new territories organically growing and growing through acquisitions. We've done two very nice acquisitions over the last couple of years, and so what I think Q1 did have some challenges. We are very aware what those challenges are, the drivers of those challenges and very focused on addressing them so I think the momentum will continue.

Grant Jordan - Wells Fargo

And were any of those challenges related to market share?

Alan Ennis

You know we have, we don't report market shares you know we had some challenges in certain retailers around the world. We had successes in retailers around the world. So it’s very retailer specific or market specific, nothing worth calling us.

Grant Jordan - Wells Fargo

Okay, so overall that wasn’t really one of the drivers for the decline in profitability in Q1.

Alan Ennis

Not particularly.

Grant Jordan - Wells Fargo

You talked about China being a challenge, have you seen any sort of recovery in the spending in China.

Chris Elshaw

Well, as I said our consumption was down. So the economy there remains difficult. There's reduced footfall in the department stores. So we have experienced it ourselves. We are hopeful that we will come but we are really focused on that on executing our plans in still. So given the fact that we've experienced less consumers in the stores, we need to focus on making sure that when they are in the store and at our counter we maximize our effectiveness with them which is why we are focused.

Alan Ennis

Grant its Alan, just to make a follow-up on one of your points about the decline in profitability, you know what Steven mentioned earlier specifically you know we had some fairly significant headwinds from currency in the quarter. If you look at our top line, it was impacted almost $6 million from currency, which had a greater than $2 million impact on profitability in the quarter, primarily because of our businesses in South Africa and Japan and the strength of the US dollar relative to the two of those and also we had a higher compensation expenses as Steven mentioned. So if you look at those two items that's kind of a unique you know profitability was essentially flat year-over-year in the quarter.

Operator

We will take our next question from Jeff (inaudible) with Stone Harbor Investment.

Unidentified Analyst

Just curious about the oil and lower cost of that commodity, just curious if that could help your cost of goods sold throughout the balance of this year or can you comment about how much you are locked in with your cost for this year.

Steven Berns

Jeff its Steven Berns. As we discussed in the past oil is not a big driver of cost of our input cost, you know obviously with all manufacturers and distributors it relates to more about the cost of transportation, but its not a big driver for us and our cost of inputs.

Unidentified Analyst

Okay. Do you have any general comment about how your cost outlook is for this year.

Steven Berns

When we look at our input costs you know clearly labor is a big piece of our costs and from a material standpoint we don't see anything significant versus what our expectations were. And as we always have said we are managing both from the standpoint of looking for efficiencies within our production capabilities; so we are not expecting costs to initially go up but we plan for savings in our cost of goods line as we go through each of the periods to as technology enables us and production capabilities enables us to take out cost.

Unidentified Analyst

Okay. And then you have just given this bank debt or just the total debt refinance you've gone to so far this year that’s going to give you more free cash flow and you paid acquisitions in 2011 and 2012. So anything you could say about this free cash flow or acquisition sort of like the top of the list as far as the use of free cash flow?

Steven Berns

Yes, so just as it relates to the use of cash flow, specifically, we've been exquisite over the last couple of years. We've done two, as I said, very nice acquisitions with SinfulColors and Pure Ice. We're investing appropriately in the business where we need to today and so certainly continuing to grow both through organic opportunities and through acquisition is a key priority for us.

Operator

We will take a follow-up question from Connie Maneaty with BMO Capital Markets. Please go ahead.

Connie Maneaty - BMO Capital Markets

Just two things. On Almay, what gives you confidence that an Almay lip offering will be successful this time? You know I forget what it was called hair good color or something like that. You know Almay is just not known for lips and there are other lip balms out there, so what's the special thought on Almay lips?

Chris Elshaw

Okay, so, yes, you are right. Almay has been in lip before and we've not been particularly successful and now we're re-entering. So here is how we're re-entering. First of all, lip is an increasingly hot category and we're seeing future trends heading in that direction and it's becoming a category a little bit like [naive] people to try a lot more things.

Lip balm is that kind of product. Lip balm is a much more impulse product than say a standard lipstick that you can have, so we think that we are entering in the place where there is more opportunity for impulse. Second thing is liquid lip balm is a new form, normally a balm is a solid in a stick, but this is a liquid form, which also provides not just color but hydration.

So that’s a unique offering in the marketplace. So between the trends towards impulse on lip, what we think is a unique form what we then have to do is make sure that we execute it and still so that we gain those impulse sales. So that's what we’re basing our perspective on time will tell of course but that’s why we think it's a good launch to make.

Connie Maneaty - BMO Capital Markets

And when does this ship?

Chris Elshaw

It’s shipping next month.

Connie Maneaty - BMO Capital Markets

Okay. And advertising I imagine will be supportive of this right to get it to rise above the other noise?

Chris Elshaw

Yeah, we will be advertising shortly after. Obviously as you know that we start with displays in store and then it moves to the world when the research take place in the middle of the year and that's when the more (inaudible) kicks off late, but obviously we are looking to see what sales off take is from the initial displays.

Connie Maneaty - BMO Capital Markets

Okay. That's interesting. And then just I know you don't comment on market shares, but they are available and I just wanted to confirm that what we look at matches what you are seeing which is Revlon gaining share in lip and face makeup and nail, this is just U.S. over the last 12 weeks. And having lost share in eye, does that match what you see?

Chris Elshaw

We are very pleased with all those contribution mentioned. Eye, we do continue to focus on as you know because you know our business well. We have a relatively small mascara business. We are just about to some new mascaras there and we are very focused on driving that. Although we do have a strong eye shadow business because as you know Revlon is all about color. So we are pleased with the pace of our business in general.

Operator

And at this time, there are no further questions. I will now turn the call back over to Mr. Ennis for any additional or closing remarks.

Alan Ennis

Thank you, Cynthia, and thank you for joining our conference call. Before we end the call, I would like to take this opportunity to remind you about the Annual Revlon Run/Walk For Women. Our New York City Run/Walk is on Saturday May 4th and will be hosted by our brand ambassadors, Emma Stone and Olivia Wilde. Our Los Angeles Run/Walk is on Saturday May 11th and will be hosted by our brand ambassador, Halle Berry.

We are very proud of our longstanding film topic support for women’s health initiatives and to fight against women’s cancers. Over the years we have helped to raise millions of dollars for research, education and efficacy. If you would like to donate to this cause or register to participate in either of the Run/Walk events, please visit revlonrunwalk.org.

We look forward to speaking with you when we report our second quarter 2013 results. Thank you and have a wonderful day.

Operator

Ladies and gentlemen, this will conclude today's conference call. We thank you for your participation.

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