FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2013 SECOND QUARTER RESULTS

 

 

New York, New York, August 7, 2013: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2013.

 

Second Quarter 2013 Compared to Second Quarter 2012:

·   Net sales of ongoing brands (excluding Burberry brand sales) increased 17% to $96.8 million from $82.7 million;

·   Net sales including Burberry brand sales were down 19.3% to $117.5 million, compared to $145.6 million; at comparable foreign currency exchange rates, net sales declined 20.6%;

·   European-based operations generated sales of ongoing brands of $72.0 million, up 15.0% from $62.8 million; including Burberry brand sales, European-based sales were down 26.2%;

·   Sales by U.S.-based operations were $24.8 million, up 24.4% from $20.0 million;

·   Gross margin was 54.1% of net sales compared to 60.8%;

·   S, G & A expense as a percentage of net sales was 47.4% compared to 52.1%;

·   Operating margin was 6.7% of net sales compared to 8.7% of net sales;

·   Net income attributable to Inter Parfums, Inc. was $3.8 million compared to $6.0 million; and,

·   Basic and diluted earnings per share attributable to Inter Parfums, Inc. were $0.12 compared to $0.20.

 

Commenting on European-based operations, Jean Madar, Chairman & CEO of Inter Parfums stated, “Our ongoing prestige brands generated impressive comparable quarter sales growth of 15%.  With the 2013 launch of Flash, our second fragrance by Jimmy Choo, and continued sales of the brand’s signature scent, Jimmy Choo brand sales rose 43%. Driven by the continued strong demand for its Legend fragrances, Montblanc sales increased 20% compared to the second quarter of 2012.  Lanvin sales were up 14% reflecting the continued popularity of Eclat d’Arpège and the recent launch of Lanvin Me, coupled with the steady performance of the Jeanne Lanvin line.  In the second half, new product launches and rollouts are in the works for the Repetto signature scent and Place Vendôme by Boucheron.”

 

Regarding U.S.-based operations, Mr. Madar noted, “Sales benefited from strong consumer demand and expanded retail distribution for Anna Sui fragrances, and we expect this brand to gain further momentum following the launch of La Vie de Bohème during the third quarter.  Additionally, in April 2013, our U.S.-based operations took over the manufacture and distribution of legacy Alfred Dunhill fragrances, which provided an incremental contribution to second quarter 2013 growth for our U.S. business.  In the second half, we have several new products coming to market for Banana Republic and Gap, and an entirely new fragrance family launching for bebe.”

 

Mr. Madar continued, “The remaining Burberry inventory generated $20.7 million in second quarter sales and officially concluded this chapter in our Company’s story.  We move forward confident in our ability to grow our business through the introduction of new fragrances for our core brands by broadening our distribution channels and by adding new names to our brand portfolio.  On the last point, we recently signed agreements with Shanghai Tang, China’s premiere luxury fashion label, and Agent Provocateur, a London-based purveyor of edgy, upscale lingerie. They are two unique brands upon which we plan to build successful fragrance enterprises that capture the aura of each.  In addition to adding new brands through licensing or similar arrangements, we are also on the lookout for suitable acquisitions.”

 

 

Russell Greenberg, Executive Vice President & Chief Financial Officer noted, “The sale of remaining Burberry inventory at essentially no margin depressed our consolidated gross margin for the second quarter, which was partially offset by lower selling, general and administrative expenses related to the brand.” 

 

Mr. Greenberg also pointed out, “There was a $2.1 million favorable swing in ‘other income’ reflecting a gain on foreign currency versus a loss in last year’s second quarter plus a significant increase in interest income in the current period.  Also of note, the effective income tax rate in the current second quarter was 50% as compared to 35% for the corresponding period of the prior year.  In 2013, we incurred a new tax levied by the French Government equal to 3% on any dividend paid by a French company to its shareholders.”

 

Mr. Greenberg continued, “Cash flows from operating activities was a use of $20.6 million in the second quarter due predominantly to the payment of taxes in April, as previously disclosed, at a rate of approximately 36% on the $198.8 million gain on the termination of our agreement with Burberry recognized in December 2012.  Even with this cash usage, our balance sheet remains extremely strong with $400 million in working capital, including approximately $262 million in cash, cash equivalents and short-term investments, and no long-term debt as of the end of the second quarter.”

 

Affirms 2013 Guidance

Mr. Greenberg concluded, “Last month we raised our sales guidance to approximately $525 million resulting in net income attributable to Inter Parfums, Inc. of approximately $1.14 per diluted share. Obviously, our earnings guidance implies a breakeven second half as we are investing heavily in promotion and advertising to bolster support for the Repetto and Boucheron launches, and the continued worldwide development of the Lanvin, Jimmy Choo and Montblanc brands.  Our investments in these brands are expected to yield accelerated sales growth for Inter Parfums, Inc. in the coming years.”  Guidance assumes the dollar remains at current levels.

 

Dividend

The Company’s regular quarterly cash dividend of $0.12 per share will be paid on October 14, 2013 to shareholders of record on September 30, 2013.

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Thursday, August 8, 2013.  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.  Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. 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. We suggest listeners use Microsoft Explorer as their browser.

 

In the nearly 30 years since its founding, Inter Parfums, Inc. has been selected as the fragrance and beauty partner for a growing list of brands that include Lanvin, Montblanc, Jimmy Choo, Boucheron, Van Cleef & Arpels, Karl Lagerfeld, Paul Smith, S.T. Dupont, Balmain, Repetto, Agent Provocateur, Alfred Dunhill, Anna Sui, Shanghai Tang, Gap, Banana Republic, Brooks Brothers, bebe, Betsey Johnson and Nine West.  Inter Parfums is known for innovation, quality and its ability to capture the genetic code of each brand in the products it develops, manufactures and distributes in over 100 countries worldwide.

 

 

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, 2012 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.

 

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP financial information in public disclosures. The Company believes that our presentation of the non-GAAP financial information included in this release is important supplemental measures of operating performance to investors.

 

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,

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

Net sales

 

$           117,485

 

$          145,555

 

$           331,296

 

$          310,923

 

 

 

 

 

 

 

 

 

Cost of sales

 

                53,878

 

               57,099

 

             133,045

 

            116,389

 

 

 

 

 

 

 

 

 

Gross margin

 

                63,607

 

               88,456

 

             198,251

 

            194,534

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                55,708

 

               75,828

 

             123,376

 

            150,152

 

 

 

 

 

 

 

 

 

Income from operations

 

                  7,899

 

               12,628

 

                74,875

 

               44,382

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     416

 

                    442

 

                     874

 

                    805

        (Gain) loss on foreign currency

 

                   (461)

 

                    931

 

                     982

 

                 1,178

        Interest income

 

                 (1,064)

 

                    (311)

 

                (2,254)

 

                    (835)

 

 

 

 

 

 

 

 

 

 

 

                (1,109)

 

                 1,062

 

                   (398)

 

                 1,148

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                  9,008

 

               11,566

 

                75,273

 

               43,234

 

 

 

 

 

 

 

 

 

Income taxes

 

                  4,487

 

                 4,085

 

                27,810

 

               15,499

 

 

 

 

 

 

 

 

 

Net income

 

                  4,521

 

                 7,481

 

                47,463

 

               27,735

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                     706

 

 

                 1,473

 

 

                11,952

 

 

                 6,230

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$                3,815

 

 

$               6,008

 

 

$             35,511

 

 

$            21,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.12

 

                $0.20

 

               $1.16

 

               $0.70

           Diluted

 

               $0.12

 

                $0.20

 

               $1.14

 

               $0.70

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                30,748

 

               30,563

 

                30,717

 

             30,557

           Diluted

 

                30,953

 

               30,688

 

                30,900

 

            30,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               $0.12

 

               $0.08

 

               $0.24

 

             $0.16

 

 


 

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

 

ASSETS

 

 

June 30,

2013

 

December 31,
2012

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$              142,117

 

$              307,335

        Short-term investments

 

                119,682

 

                            --

        Accounts receivable, net

 

                124,098

 

                149,340

        Inventories

 

                112,641

 

                142,614

        Receivables, other

 

                     1,818

 

                     2,534

        Other current assets

 

                     5,018

 

                     5,897

        Income tax receivable

 

                        590

 

                     1,968

        Deferred tax assets

 

                     7,167

 

                  13,132

 

 

 

 

 

                            Total current assets

 

                513,131

 

                622,820

 

 

 

 

 

Equipment and leasehold improvements, net

 

                     9,336

 

                  12,289

 

 

 

 

 

Goodwill

 

                        947

 

                        954

 

 

 

 

 

Trademarks, licenses and other intangible assets, net

 

                110,344

 

                113,041

 

 

 

 

 

Other assets

 

                  11,062

 

                  10,816

 

 

 

 

 

Total assets

 

$              644,820

 

$              759,920

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

        Loans payable – banks

 

$                      394

 

$                27,776

        Accounts payable, trade

 

                  58,911

 

                  73,113

        Accrued expenses

 

                  43,261

 

                  68,768

        Income taxes payable

 

                     7,161

 

                  84,030

        Dividends payable

 

                     3,695

 

                     2,453

 

 

 

 

 

                            Total current liabilities

 

                113,422

 

                256,140

 

 

 

 

 

Deferred tax liability

 

                     3,424

 

                     3,799

 

 

 

 

 

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 30,787,894 and 30,680,634 shares at

June 30, 2013 and December 31, 2012, respectively

 

 

 

                          31

 

 

 

                          31

Additional paid-in capital

 

                  56,122

 

                  54,679

Retained earnings

 

                377,887   

 

                349,672

Accumulated other comprehensive income

 

                     8,377

 

                   12,498

Treasury stock, at cost, 9,976,524 common shares at                                    June 30, 2013 and December 31, 2012

 

 

                  (35,404)

 

 

                  (35,404)

 

 

 

 

 

                    Total Inter Parfums, Inc. shareholders’ equity

 

                407,013

 

                381,476

 

 

 

 

 

Noncontrolling interest

 

                120,961

 

                118,505

 

 

 

 

 

                            Total equity

 

                527,974

 

                499,981

 

 

 

 

 

Total liabilities and equity

 

$              644,820

 

$              759,920