FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2019 SECOND QUARTER RESULTS

 

Net Sales up 11.3%, Operating Income up 19.7%

 

New York, New York, August 5, 2019: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2019.  The average dollar/euro exchange rate for the current second quarter was 1.12 compared to 1.19 in the second quarter of 2018. 

 

Second Quarter 2019 Compared to Second Quarter 2018:

·   Net sales were $166.2 million, up 11.3% from $149.4 million, at comparable foreign currency exchange rates, net sales increased 13.7%;

·   Net sales by European based operations rose 8.7% to $125.6 million from $115.6 million;

·   Net sales by U.S. based operations increased 20.4% to $40.6 million from $33.8 million;

·   Gross margin was 64.3% compared to 64.0%;

·   S,G&A expenses as a percentage of net sales were 50.8% compared to 51.5%

·   Operating income increased 19.7% to $22.5 million from $18.8 million;

·   Operating margin rose to 13.5% compared to 12.6%;

·   The effective income tax rate was 29.5% compared to 30.2%;  

·   Net income attributable to Inter Parfums, Inc. increased 13.0% to $12.3 million from $10.9 million;

·   Net income attributable to Inter Parfums, Inc. per diluted share rose 11.4% to $0.39 from $0.35.

 

Thus for the first half of 2019, net sales increased 7.3% to $344.5 million, as compared to $321.1 million for the corresponding period of the prior year.  At comparable foreign currency exchange rates, net sales increased 10.4% for the period.  Net income attributable to Inter Parfums, Inc. rose to $31.2 million, an increase of 16.4% compared to $26.8 million in the same period last year, while net income attributable to Inter Parfums, Inc. per diluted share rose 16.5% to $0.99 from $0.85.  For the six months ended June 30, 2019 and 2018, the average U.S. dollar/euro exchange rate was 1.13 and 1.21, respectively.

 

“Through the first half of 2019,” Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, “Our two largest markets, North America and Western Europe, outperformed last year’s first half, with sales growth of 13.3% and 7.9%, respectively.  The other markets with gains were the Middle East and Eastern Europe, where sales rose 28.8% and 3.6%, respectively over the first half of last year.  The nearly 7% second quarter sales gain in Asia bridged the 9.3% shortfall in the first quarter, resulting in a modest 2.3% sales decline in that market through the first half.”

 

Discussing the biggest gainers within European based operations, Mr. Madar stated, “Two of our largest brands achieved exceptional sales growth in the second quarter.  As we recently reported, our largest brand, Montblanc, achieved a 28.3% increase in net sales fueled by the rollout of its newest scent, Montblanc Explorer, which layered sales upon the brand’s more established fragrances.  Our third largest brand, Coach, benefitted from the strong performance of Coach Floral Blush, which along with ongoing sales of Coach legacy scents, resulted in a second quarter sales gain of 43.8%.  In addition, we are pleased with the initial performance Lanvin’s A Girl in Capri, whose launch helped offset much of the brand’s sales decline in the first quarter.  Two of our smaller brands are making a strong comeback, notably Van Cleef & Arpels and Karl Lagerfeld, which achieved second quarter sales growth of 61.3% and 115.8%, respectively, with much of the growth coming from each brand’s expanding multi-scent collections.”

 

 

 

Moving on to U.S. based operations, Mr. Madar continued, “The GUESS brand was the primary reason for the more than 20% improvement in sales.  As we previously noted, we expect that the recent domestic debut of 1981 Los Angeles and upcoming launch of Seductive Noir will further enhance the brand’s fragrance franchise.  We also saw comparable quarterly gains in Abercrombie & Fitch and Hollister brands spurred by new product launches.  These include the Authentic duo by Abercrombie & Fitch and for Hollister fragrances, the debut of the Wave limited edition duo, plus our first Festival brand extension, Festival Nite.”  

 

Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “For European operations, gross profit margin was 68% for both the current and prior year’s second quarter while for U.S. operations, it was 52% as compared to 50% in last year’s second quarter.  As in the first quarter of 2019, higher cost of sales in product mix within our European operations offset the benefit from the stronger U.S. dollar.  Leverage on selling, general and administrative expense and the improvement in gross margin, especially for U.S. operations, resulted in the 19.7% increase in second quarter operating income and the 900 basis point improvement in operating margin.”

 

Mr. Greenberg continued, “The most material non-operating item of note was the foreign currency loss aggregating $0.5 million in the current second quarter compared to a $1.5 million gain on foreign currency in the second quarter of 2018.” 

 

Mr. Greenberg also pointed out, “We closed the quarter with working capital of $376 million, including approximately $214 million in cash, cash equivalents and short-term investments, a working capital ratio of over 3.1 to 1 and only $10.5 million of long-term debt.”

 

Affirms 2019 Guidance

Mr. Greenberg, concluded, “We continue to expect 2019 net sales to approximate $712 million resulting in net income attributable to Inter Parfums, Inc. per diluted share of $1.88.  Guidance assumes the dollar remains at current levels.”

 

Dividend

The Company’s regular quarterly cash dividend of $0.275 per share will be paid on October 15, 2019 to shareholders of record on September 30, 2019.

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, August 6, 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.  If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at Inter Parfums’ website.

 


 

Founded in 1982, Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes and cosmetics as the exclusive worldwide licensee for Abercrombie & Fitch, Agent Provocateur, Anna Sui, Boucheron, Coach, Dunhill, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lily Aldridge, Montblanc, Oscar de la Renta, Paul Smith, Repetto, S.T. Dupont and Van Cleef & Arpels.  Inter Parfums is also the owner of Lanvin fragrances and the Rochas brand.  Through its global distribution network, the Company’s products are sold in over 120 countries.

 

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
June 30,

 

Six Months Ended
June 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Net sales

 

$           166,242

 

$           149,367

 

$           344,484

 

$           321,133

 

 

 

 

 

 

 

 

 

Cost of sales

 

                59,268

 

                53,713

 

             127,669

 

             119,851

 

 

 

 

 

 

 

 

 

Gross margin

 

             106,974

 

                95,654

 

             216,815

 

             201,282

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                84,514

 

                76,885

 

             161,067

 

             152,117

 

 

 

 

 

 

 

 

 

Income from operations

 

                22,460

 

                18,769

 

                55,748

 

                49,165

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     203

 

                     568

 

                     830

 

                  1,030

        (Gain) loss on foreign currency

 

                     546

 

                 (1,500)

 

                     697

 

                 (1,295)

        Interest income

 

                    (419)

 

                    (729)

 

                 (2,325)

 

                 (2,474)

 

 

 

 

 

 

 

 

 

 

 

                     330

 

                 (1,661)

 

                    (798)

 

                 (2,739)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                22,130

 

                20,430

 

                56,546

 

                51,904

 

 

 

 

 

 

 

 

 

Income taxes

 

                  6,530

 

                  6,171

 

                15,969

 

                15,783

 

 

 

 

 

 

 

 

 

Net income

 

                15,600

 

                14,259

 

                40,577

 

                36,121

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                  3,282

 

 

                  3,360

 

 

                  9,366

 

 

                  9,313

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$             12,318

 

 

$             10,899

 

 

$             31,211

 

 

$             26,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.39

 

               $0.35

 

             $0.99

 

             $0.86

           Diluted

 

               $0.39

 

               $0.35

 

             $0.99

 

             $0.85

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,449

 

                31,299

 

                31,440

 

                31,283

           Diluted

 

                31,687

 

                31,490

 

                31,683

 

                31,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               $0.28

 

               $0.21

 

               $0.55

 

               $0.42

 

 

 


 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

June 30,

2019

 

December 31,
2018

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$              146,790

 

$              193,136

        Short-term investments

 

                   66,941

 

                   67,870

        Accounts receivable, net

 

                 147,833

 

                 136,420

        Inventories

 

                 180,064

 

                 160,978

        Receivables, other

 

                     2,162

 

                     2,112

        Other current assets

 

                     9,960

 

                     8,076

        Income taxes receivable

 

                         758

 

                         810

 

 

 

 

 

                            Total current assets

 

                 554,508

 

                 569,402

 

 

 

 

 

Equipment and leasehold improvements, net

 

                   10,776

 

                     9,839

 

 

 

 

 

Right-of-use assets, net

 

                   32,430

 

                             --

Trademarks, licenses and other intangible assets, net

 

                 201,425

 

                 204,325

Deferred tax assets

 

                   10,022

 

                     9,299

 

 

 

 

 

Other assets

 

                     6,031

 

                     6,302

 

 

 

 

 

Total assets

 

$              815,192

 

$              799,167

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

        Current portion of long-term debt

 

$                 24,906

 

$                 23,155

        Current portion of lease liabilities

 

                     6,274

 

                             --

        Accounts payable – trade

 

                   49,047

 

                   58,328

        Accrued expenses

 

                   83,741

 

                   92,468

        Income taxes payable

 

                     5,987

 

                     4,396

        Dividends payable

 

                     8,649

 

                     8,630

 

 

 

 

 

                            Total current liabilities

 

                 178,604

 

                 186,977

 

 

 

 

 

Long–term debt, less current portion

 

                  10,477

 

                  22,906

 

 

 

 

 

Lease liabilities, less current portion

 

                   27,604

 

                             --

Deferred tax liability

 

                     3,735

 

                     3,538

 

 

 

 

 

Equity:

 

 

 

 

Inter Parfums, Inc. shareholders’ equity:

 

 

 

 

Preferred stock, $.001 par; authorized
1,000,000 shares; none issued

 

 

                             --

 

 

                             --

Common stock, $.001 par; authorized 100,000,000 shares;
outstanding 31,450,205 and 31,382,127 shares at

June 30, 2019 and December 31, 2018, respectively

 

 

 

                           31

 

 

 

                           31

Additional paid-in capital

 

                   68,342

 

                   69,970

Retained earnings

 

                 463,862

 

                 448,731

Accumulated other comprehensive loss

 

                  (35,771)

 

                  (33,650)

Treasury stock, at cost, 9,864,805 shares at June 30, 2019 and December 31, 2018

 

 

                  (37,475)

 

 

                  (37,475)

 

 

 

 

 

                            Total Inter Parfums, Inc. shareholders’ equity

 

                 458,989

 

                 447,607

 

 

 

 

 

Noncontrolling interest

 

                 135,783

 

                 138,139

 

 

 

 

 

                            Total equity

 

                 594,772

 

                 585,746

 

 

 

 

 

Total liabilities and equity

 

$              815,192

 

$              799,167