Revlon, NRG Energy, Sally Beauty Holdings up with numbers; Chrysler Financial and Auto rally

By Sara Rosenberg

New York, April 30 - Revlon Inc., NRG Energy Inc. and Sally Beauty Holdings Inc. all headed higher during Thursday's trading session following the release by each company of quarterly earnings results.

In more secondary happenings, Chrysler Financial Services LLC's first- and second-lien bank debt saw a significant jump on chatter that it will be rolled into GMAC Financial Services, and Chrysler Corp. LLC's (Chrysler Auto) term loan rose with its bankruptcy filing.

Revlon rises on earnings

Revlon's term loan gained some ground during market hours after the company came out with first-quarter numbers that showed an improvement in net income, according to traders.

The term loan was quoted by one trader at 86 bid, 88 offered, up about a point on the day, and by a second trader at 86 bid, 91 offered, up about a point and a quarter on the day.

For the first quarter, Revlon had net income of $12.7 million, or $0.25 per diluted share, compared to a net loss of $2.5 million, or $0.05 per diluted share, last year.

Net sales for the quarter were $303.3 million, compared to $311.7 million in the first quarter of 2008.

And, adjusted EBITDA for the quarter was $49.1 million, including pension expense of $6 million, down from $57.5 million in the prior year, which only included $2.1 million of pension expense.

Revlon reduces debt

Revlon also said on Thursday that during the first quarter, it reduced debt by a total of $38.3 million.

The debt reduction was comprised of an $18.7 million senior secured term loan repayment and the repurchase of $23.9 million of 9½% senior notes.

After the term loan repayment, there remained outstanding at the end of the first quarter about $815 million of term loan debt, which matures in January 2012.

In addition, at March 31, there was $4 million drawn under the company's revolving credit facility.

Revlon is a New York-based cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirants/deodorants and beauty care products company.

NRG trades up

NRG was another name that saw positive momentum in bank debt trading levels on Thursday after earnings were announced showing a year-over-year improvement in income and revenues, according to traders.

The company's strip of term loan and letter-of-credit facility debt was quoted by one trader at 93¾ bid, 94¼ offered, up about a point, by a second trader at 92 bid, 95 offered, and by a third trader at 93½ bid, 94 offered, up from 92¾ bid, 93 offered.

For the first quarter, NRG generated income from continuing operations of $198 million, or $0.70 per diluted common share, compared to $45 million, or $0.12 per diluted common share, for the first quarter last year.

Total revenues for the quarter were $1.658 billion versus $1.302 billion in 2008.

Adjusted EBITDA for the quarter was $477 million, compared to $525 million in the prior year's first quarter.

"NRG's active portfolio and prudent balance sheet management have enabled the company once again to deliver strong financial results in the midst of deteriorating economic conditions and falling commodity prices, particularly in our northeast region," said David Crane, president and chief executive officer, in a news release.

NRG liquidity drops as debt repaid

NRG's liquidity as of March 31 was $3.1 billion, excluding counterparty collateral deposits, down $277 million from Dec. 31.

The decline in liquidity resulted from a $306 million decrease in cash and cash equivalents - primarily from $209 million in debt repayments - offset by a $24 million increase in letter-of-credit availability.

The debt repayments included a $197 million payment to first-lien lenders pursuant to the mandatory excess cash flow offer under the term loan B.

Also on Thursday, the company revised its guidance for 2009 adjusted EBITDA to $2.175 billion from previous estimates of $2.2 billion. This change is a result of the pending sale by the company of its 50% ownership interest in Mibrag BV to a consortium of Severočeské doly Chomutov, a member of the CEZ Group, and J&T Group.

Full-year guidance for cash flow from operations is $1.475 billion.

NRG is a Princeton, N.J.-based owner and operator of power generation portfolios.

Sally Beauty quoted higher

Sally Beauty's term loan B was yet another piece of bank debt to get a pop during the trading session with earnings results, according to a trader.

The term loan B was quoted at 90 bid, 92 offered, up from previous levels of 88 bid, 90 offered, the trader said.

For the second quarter ended March 31, Sally Beauty reported net earnings of $24.6 million, or $0.13 per diluted share, compared to net earnings of $12.4 million, or $0.07 per diluted share, last year.

Adjusted net earnings for the quarter were $23.3 million, or $0.13 earnings per diluted share, after adjusting for $1.3 million in after-tax non-cash interest credits from changes in the fair value of mark-to-market interest rate swaps. By comparison, for the fiscal 2008 second quarter, adjusted net earnings were $17.9 million, or $0.10 per diluted share, after adjusting for $5.5 million in after-tax non-cash interest charges from changes in the fair value of the mark-to-market interest rate swaps.

Consolidated net sales for the quarter were $641.5 million, a decline of 0.3% from the fiscal 2008 second quarter sales number of $643.3 million.

Sally Beauty EBITDA improves

Sally Beauty also revealed on Thursday that its adjusted EBITDA for the fiscal 2009 second quarter was $85.3 million, an increase of 8% from $79 million in the fiscal 2008 second quarter.

The company explained that this increase was primarily a result of improved gross margin and lower operating, and selling, general and administrative expenses.

In addition, during the quarter, the company repaid all $75 million drawn under its asset-based revolving credit facility and $16.7 million of term loan debt.

"Our solid financial results in the second quarter reflect strong operational performance and further demonstrate the recession resistant nature of our business," stated Gary Winterhalter, president and chief executive officer, in a news release.

"We ended the quarter with same store sales growth of 2.1%, nearly doubled GAAP net earnings and improved our working capital position. As we head into the second half of the fiscal year, we remain cautiously optimistic as economic conditions remain challenging. We will continue our focus on delivering solid financial results and a capital structure that provides ample liquidity to reduce debt and invest in long-term growth," Winterhalter added.

Sally Beauty is a Denton, Texas-based specialty retailer and distributor of professional beauty supplies.

Chrysler Financial skyrockets

One of the main attention getters on Thursday was Chrysler Financial's term loans as gains were pretty significant on talk that the company may be rolled into GMAC in connection with Chrysler Auto's bankruptcy filing, according to traders.

The first-lien term loan was quoted by one trader at 75 bid, 77 offered, up about 10 points on the day, and by a second trader at 76 bid, 77 offered, up from 68 bid, 70 offered on Wednesday. The second trader said that the loan was as high as 78 bid, 80 offered "right after the Obama press conference, but then it backed up a little."

Meanwhile, the company's second-lien term loan was quoted at 48 bid, 50 offered, up from 42 bid, 45 offered, the second trader added.

GMAC providing auto financing

On Thursday afternoon, GMAC announced that it had agreed to provide automotive financing products and services to Chrysler dealers and customers.

GMAC will be the preferred provider of new wholesale financing for Chrysler dealer inventory and has a four-year agreement for incentivized retail financing with limited exclusivity.

GMAC went on to say that it has not acquired the existing assets or liabilities of Chrysler Financial.

Chrysler Financial is a provider of financial services for vehicles.

Chrysler Auto also climbs

Chrysler Auto's term loan was another spotlight stealer during market hours as the debt gained a few points in response to the company's Chapter 11 filing, according to a trader.

The term loan was quoted at 27½ bid, 28½ offered, up from Wednesday's levels of 23 bid, 25 offered, the trader said.

Chrysler filed for bankruptcy on Thursday after reaching an agreement-in-principle to establish an alliance with Fiat SpA, under which Fiat powertrains and components will be produced at Chrysler manufacturing sites.

The company said that it was unable to obtain the necessary concessions from all of its lenders to keep it out of bankruptcy.

During the bankruptcy period, the government will provide enough debtor-in-possession financing to allow continuation for the continuation of business as usual.

Chrysler plans quick exit

Chrysler said on Thursday that it is expecting to exit from Chapter 11 within the next 30 to 60 days and is looking for quick court approval of the Fiat agreement.

Under the Fiat deal, Chrysler will transfer the majority of its operating assets to New CarCo Acquisition LLC, a limited liability company that currently is an indirect wholly owned subsidiary of Fiat.

The Fiat alliance is being financially backed by the U.S. Department of the Treasury and Export Development Canada, which together will provide the new company with about $6 billion to start up and maintain operations.

When the Fiat deal is done, the Voluntary Employee Beneficiary Association will own 55% of the new company, and the U.S. and Canadian governments will own proportionate shares of a 10% stake.

Fiat will initially hold a 20% ownership stake in Chrysler, with the right to increase its stake by an additional 15% in three increments, and cannot become a majority owner until after all U.S. government loans have been completely repaid.

Chrysler Auto is a producer and seller of Chrysler, Dodge and Jeep vehicles.

LCDX, cash stay firm

The LCDX 12 index and the cash market in general both felt stronger on Thursday, while stocks were mostly a touch lower, according to traders.

The index was quoted at 81.60 bid, 81.80 offered, up from 80.50 bid, 80.70 offered, one trader said.

And, cash was described as having an overall better tone, with things up about a half a point on the day, a second trader remarked.

"Equities were better in the morning and we didn't fade off with them," the second trader added.

Nasdaq closed up 5.36 points, or 0.31%, Dow Jones Industrial Average closed down 17.61 points, or 0.22%, S&P 500 closed down 0.83 points, or 0.1%, and NYSE closed down 2.78 points, or 0.05%.

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