INTER PARFUMS, INC. REPORTS 2018 FOURTH QUARTER AND YEAR END RESULTS

 

2018 Net Sales and Diluted EPS Increase by 14.3% and 28.6%, Respectively

 

Increases 2019 Sales & Earnings Guidance

 

New York, New York, March 4, 2019: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the fourth quarter and year ended December 31, 2018. 

 

Fourth Quarter 2018 Compared to Fourth Quarter 2017:

·   Net sales were $177.2 million, up 18.5% from $149.5 million; at comparable foreign currency exchange rates, net sales increased 21.2%;

·   Net sales by European based operations rose 16.8% to $134.8 million from $115.4 million;

·   Net sales by U.S. based operations were $42.4 million, up 24.4% compared to $34.1 million;

·   Gross margin was 66.1% for both periods;

·   S,G&A expenses as a percentage of net sales were 60.1% compared to 61.4%;

·   Operating income was $10.6 million as compared to $4.8 million;

·   Net income attributable to Inter Parfums, Inc. increased 82.9% to $8.0 million compared to $4.4 million; and,

·   Net income attributable to Inter Parfums, Inc. per diluted share rose 85.7% to $0.26 from $0.14.

 

Thus for the year as a whole, net sales increased 14.3% to $675.6 million, as compared to $591.3 million, in 2017. At comparable foreign currency exchange rates, net sales increased 12.8%. Net income attributable to Inter Parfums, Inc. increased 29.3% to $53.8 million from 2017’s $41.6 million; and net income attributable to Inter Parfums, Inc. per diluted share rose 28.6% to $1.71 from $1.33 per diluted share in 2017.

 

Jean Madar, Chairman & CEO of Inter Parfums stated, “In every region in which we operate, we achieved sales growth in 2018.  In our three largest markets, North America, Western Europe and Asia, sales rose 19%, 9% and 24%, respectively.  Our business in the Middle East has also been quite robust with a year-over-year sales increase of 17%, and even in Eastern Europe and Central and South America, 2018 sales were ahead 7% and 1%, respectively, compared to 2017.  Regarding our four largest European based brands, Montblanc remains in first place.  Despite no major 2018 launches, Montblanc brand sales were up a modest 1.4%.  Jimmy Choo brand sales rose 8.4% in 2018 after a fourth quarter surge in connection with the rollout of the brand extension, Jimmy Choo Fever.  With the release of five new scents over the past three years, Coach now claims third place among our brands, with 2018 sales just short of $100 million, and 73% ahead of 2017.  Lanvin, our fourth largest brand, achieved annual sales growth of 7% with the ubiquitous and growing Éclat d’Arpège line leading the way.”

 

Moving on to U.S. based operations, Mr. Madar noted, “The addition of GUESS legacy scents beginning in April has been a major contributor to the increase in 2018 sales, along with gains by Anna Sui and Abercrombie & Fitch for which brand extensions rather than major launches were undertaken last year.”  

 

 

 

Highlighting several key operating factors impacting profitability, Russell Greenberg, Executive Vice President and CFO stated, “Our consolidated gross margin was 63.3% and 63.6% in 2018 and 2017, respectively.  Gross margin for European operations was 66.3% in 2018 and 67.1% in 2017; the average dollar/euro exchange rate was 1.18 in 2018, as compared to 1.13 in 2017 with the weaker dollar accounting for the small fluctuation.  For U.S. operations, gross margin was 51.4% and 49.3% in 2018 and 2017, respectively with the improvement primarily resulting from increased sales of higher margin prestige products under licenses.”

 

He continued, “Selling, general and administrative expenses rose 13% compared to 2017, and as a percentage of net sales, were 49% and 50% for 2018 and 2017, respectively.  Once again, promotion and advertising included selling, general and administrative expenses peaked in the fourth quarter, which brought the total for the full year to 20.3% of net sales, down slightly from 20.9% in 2017.”

 

Discussing non-operating items, Mr. Greenberg pointed out that in 2017, there was a $1.5 million loss on foreign currency while in 2018, the loss was $250,000 and the Company’s effective income tax rate was 27.3% in 2018 and 29.2% in 2017.

 

Mr. Greenberg also noted, “In 2018, cash provided by operating activities aggregated $63.0 million and we closed the year with working capital of $382 million, including approximately $261 million in cash, cash equivalents and short-term investments, a working capital ratio of over 3 to 1 and $46.1 million of long-term debt, including current maturities.”

 

2019 Plans                                                                  

Mr. Madar continued, “In addition to brand extensions and flankers, we have several major launches in the works for 2019.  We recently unveiled Montblanc Explorer for men and have been rolling out our first men’s scent for Rochas called Moustache.  Others in the pipeline include a fragrance duo for Abercrombie & Fitch called Authentic, a signature scent for Dunhill, a new men’s pillar for the Jimmy Choo family of fragrances, and for Lanvin, A Girl in CapriFor our newest brands, Graff will launch a women’s multi-scent collection late in the year and we will debut our first scents sold exclusively via e-commerce for the Lily Aldridge brand beginning in the fall.”

 

Increases 2019 Guidance

Mr. Greenberg concluded, “Based upon favorable business conditions that have been unfolding this year, we are raising our 2019 guidance.  We are raising our net sales guidance from $705 million to $712 million resulting in net income attributable to Inter Parfums, Inc. per diluted share of $1.85, from our prior estimate of $1.81. Guidance for 2019 assumes the dollar remains at current levels.”

 

Dividend

The Company’s regular quarterly cash dividend of $0.275 per share is payable on April 15, 2019 to shareholders of record on March 29, 2019.

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 1:00 PM ET, today, Monday, March 4, 2019.  Interested parties may participate in the call by dialing (201) 493-6749; please call in 10 minutes before the conference call is scheduled to begin and ask for the Inter Parfums call.  The conference call will also be broadcast live over the Internet.  To listen to the live call, please go to www.interparfumsinc.com and click on the Investor Relations section.

 

 

Founded more than 30 years ago, Inter Parfums, Inc. is a premier fragrance company with a diverse portfolio of prestige brands that includes Abercrombie & Fitch, Agent Provocateur, Anna Sui, Boucheron, Coach, Dunhill, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Oscar de la Renta, Paul Smith, Repetto, Rochas, S.T. Dupont and Van Cleef & Arpels.  The fragrance products developed, produced and distributed by Inter Parfums are sold in more than 100 countries throughout the world.

 

Statements in this release which are not historical in nature are forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved.  In some cases you can identify forward-looking statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would," or similar words.  You should not rely on forward-looking statements, because actual events or results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors.  These factors include, but are not limited to, the risks and uncertainties discussed under the headings “Forward Looking Statements” and "Risk Factors" in Inter Parfums' annual report on Form 10-K for the fiscal year ended December 31, 2018 and the reports Inter Parfums files from time to time with the Securities and Exchange Commission.  Inter Parfums does not intend to and undertakes no duty to update the information contained in this press release.

 

 

Contact at Inter Parfums, Inc.                        -or-      Investor Relations Counsel

Russell Greenberg, Exec. VP & CFO             The Equity Group Inc.

(212) 983-2640                                               Fred Buonocore (212) 836-9607/fbuonocore@equityny.com

rgreenberg@interparfumsinc.com                   Linda Latman (212) 836-9609/llatman@equityny.com

www.interparfumsinc.com                             www.theequitygroup.com

 

 

 

 

See Accompanying Tables


 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Net sales

 

$         177,227

 

$         149,526

 

$         675,574

 

$         591,251

 

 

 

 

 

 

 

 

 

Cost of sales

 

60,095

 

              50,725

 

           248,012

 

           214,965

 

 

 

 

 

 

 

 

 

Gross margin

 

117,132

 

              98,801

 

           427,562

 

           376,286

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

106,545

 

              91,864

 

           332,831

 

           295,540

Impairment loss

 

                        --

 

                2,123

 

                        --

 

                2,123

 

Income from operations

 

 

              10,587 

 

 

                4,814

 

 

              94,731 

 

 

              78,623

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                1,025

 

                   498

 

                2,578

 

                1,992

        Loss on foreign currency

 

                   436

 

                   241

 

                   251

 

                1,549

        Interest income

 

                 (636)

 

                 (195)

 

              (3,957)

 

               (2,983)

 

 

                   825

 

                   544

 

              (1,128)

 

                   558

 

 

 

 

 

 

 

 

 

Income before income taxes

 

9,762

 

                4,270

 

              95,859

 

              78,065

 

 

 

 

 

 

 

 

 

Income taxes

 

594

 

              (1,502)

 

              26,144

 

              22,812

 

 

 

 

 

 

 

 

 

Net income

 

                9,168

 

                5,772

 

              69,715

 

              55,253

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                1,121

 

 

                1,372

 

 

              15,922

 

 

              13,659

 

Net income attributable to Inter Parfums, Inc.

 

 

$              8,047

 

 

$              4,400

 

 

$           53,793

 

 

$           41,594

 

 

 

 

 

 

 

 

 

Net income attributable to Inter Parfums, Inc. common shareholders:

 

 

 

 

 

 

 

 

           Basic

 

$0.26

 

                $0.14

 

                $1.72

 

                $1.33

           Diluted

 

$0.26

 

                $0.14

 

                $1.71

 

                $1.33

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,340

 

              31,200

 

              31,308

 

              31,172

           Diluted

 

                31,584                         

 

              31,378

 

              31,522

 

              31,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$0.28

 

                $0.21

 

                $0. 91

 

             $0.72

 


 

 

 

INTER PARFUMS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(In thousands except share and per share data)

 

Assets

 

2018

 

2017

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

193,136    

$

208,343   

 

Short-term investments

 

67,870    

 

                69,899 

 

Accounts receivable, net

 

136,420    

 

120,749   

 

Inventories

 

160,978    

 

137,058   

 

Receivables, other

 

 

                2,112

 

2,405   

 

Other current assets

 

                8,076

 

7,356   

 

Income taxes receivable

 

                   810

 

3,468   

 

 

 

 

 

Total current assets

 

             569,402 

 

549,278   

Equipment and leasehold improvements, net

 

                   9,839   

 

10,330   

Trademarks, licenses and other intangible assets, net

 

               204,325   

 

200,495   

Deferred tax assets

 

 

 

 

                   9,299   

 

9,658   

Other assets

 

 

 

 

                  6,302  

 

8,011   

 

 

 

 

 

Total assets

$

               799,167   

$

777,772   

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

                 23,155   

 

24,372   

 

Accounts payable - trade

 

 

58,328    

 

52,609   

 

Accrued expenses

 

 

92,468    

 

81,843   

 

Income taxes payable

 

4,396    

 

1,722   

 

Dividends payable

 

 

8,630    

 

6,561   

 

 

 

 

 

Total current liabilities

 

186,977    

 

167,107   

Long–term debt, less current portion

    

              22,906

 

36,207   

Deferred tax liability

 

3,538    

 

3,821   

Equity:

 

 

 

 

 

Inter Parfums, Inc. shareholders’ equity:

 

 

 

 

 

     Preferred stock, $0.001 par value. Authorized 1,000,000 shares;

 

 

 

 

 

 

     none issued

 

 

                        --   

 

--   

 

     Common stock, $0.001 par value. Authorized 100,000,000 shares;

 

 

 

 

 

 

     outstanding, 31,382,127 and 31,241,548 shares

 

 

 

 

 

 

     at December 31, 2018 and 2017, respectively

 

                        31   

 

31   

 

     Additional paid-in capital

 

69,970    

 

66,004   

 

     Retained earnings

 

 

448,731    

 

422,570   

 

     Accumulated other comprehensive loss

 

     (33,650)   

 

 (17,832)  

 

     Treasury stock, at cost, 9,864,805 common shares

 

 

 

 

 

 

     at December 31, 2018 and 2017

 

   (37,475)   

 

               (37,475)

 

 

 

 

 

Total Inter Parfums, Inc. shareholders’ equity

 

447,607    

 

433,298   

     Noncontrolling interest

 

 

138,139    

 

137,339   

 

 

 

 

 

Total equity

 

585,746    

 

570,637   

 

 

 

 

 

Total liabilities and equity

$

799,167    

$

               777,772