FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2017 SECOND QUARTER RESULTS

 

Net Income Increases 15.7% on 10.2% Increase in Net Sales

 

New York, New York, August 7, 2017: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2017. 

 

Second Quarter 2017 Compared to Second Quarter 2016:

·   Net sales were $129.1 million, up 10.2% from $117.2 million; at comparable foreign currency exchange rates, net sales increased 11.3%;

·   Net sales by European based operations rose 20.5% to $106.7 million from $88.6 million;

·   Net sales by U.S. based operations were $22.4 million compared to $28.6 million;

·   Gross margin was 65.0% compared to 63.6%;

·   S,G&A expenses as a percentage of net sales were 53.8% compared to 53.7%;

·   Operating income increased 26.3% to $14.5 million from $11.5 million;

·   Operating margin rose to 11.2% compared to 9.8%; and

·   Net income attributable to Inter Parfums, Inc. increased 15.7% to $6.7 million or $0.22 per diluted share from $5.8 million or $0.19 per diluted share.

 

Discussing the 20.5% sales increase in European based operations, Jean Madar, Chairman & CEO of Inter Parfums, Inc., stated, “Our three largest brands performed exceptionally well during the second quarter.   In the absence of a new product launch, there was a 15% increase in Montblanc fragrance sales driven by the men’s Legend and Lady Emblem fragrance lines.  Similarly, there was a 15% increase in Jimmy Choo brand sales, with two recent extensions, Jimmy Choo L’Eau and Jimmy Choo Man Ice, layering new sales upon the brand’s older, more established fragrances.  Lanvin, our third largest brand, grew sales by 22%, spurred by the rollout of Modern Princess and a welcome upturn in brand sales in Russia and China, where Lanvin is an especially desirable prestige label.”

 

He continued, “The launch of Mademoiselle Rochas has been especially gratifying with sales expanding beyond the brand’s entrenched markets, France and Spain.  Coach is showing exceptional promise, with sales of the women’s signature scent benefitting from wider distribution, adding approximately $9.0 million in incremental sales for the quarter.  We also expanded and refreshed the Van Cleef & Arpels Collection Extraordinaire with Bois Doré and Rêve de Cashmere during the second quarter.” 

 

He went on to say, “In the second half of the year, we have Coach for Men, debuting in the fall with actor James Franco as our advertising model, and we will launch Montblanc Legend Night around holiday time.   As planned, we have a new duo for Karl Lagerfeld called Les Parfums Matières debuting in the second half, but have moved the brand extension for Lanvin’s Éclat d’Arpège to 2018.”

 


Discussing U.S. based operations, Mr. Madar noted, “In last year’s second quarter, the launch of our first ever Abercrombie & Fitch men’s scent, First Instinct and the Hollister fragrance duo, Wave, drove the nearly 15% increase in sales by U.S. based operations, setting a high bar for this year’s quarterly comparison.  With the planned introduction of Icon Racing by Dunhill and Fantasia by Anna Sui, both in September, we look forward to more favorable quarterly comparisons.”

 

Mr. Madar concluded, “Sales growth by region thus far this year is especially encouraging.  Sales in our three largest markets, Western Europe, North America and Asia are up 3.8%, 25.3% and 19.9%, respectively, compared to the first half of 2016.  Ranked by size, our next three markets, the Middle East, Central and South America and Eastern Europe, achieved sales growth of 30.9%, 15.6% and 93.9%, respectively.”

 

Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “The increase in gross margin was attributable to a higher proportion of European based sales, and to a lesser extent, the stronger dollar to euro exchange rate during the period, offset somewhat by the reduction in sales of higher margin Abercrombie & Fitch and Hollister prestige products by U.S. based operations.  While advertising and promotion increased 22.3% from last year’s second quarter, there was little change in overall selling, general and administrative expenses as a percent of sales.”

 

He continued, “The second quarter swing item was below the operating income line, namely the $817,000 loss on foreign currency this period versus a $661,000 gain in last year’s second quarter.  Also of note, our effective tax rate was 33% in the current second quarter versus 36% in last year’s second quarter.”  

 

Mr. Greenberg also pointed out, “We closed the quarter with working capital of $358 million, including approximately $241 million in cash, cash equivalents and short-term investments, a working capital ratio of 3.4 to 1 and $69.1 million of long-term debt including current maturities incurred in connection with the 2015 Rochas brand acquisition.”

 

Affirms 2017 Guidance

Mr. Greenberg noted, “Our year-to-date performance, coupled with better than previously anticipated sales of Jimmy Choo, Lanvin, Rochas, and Coach brand products, motivated the recent increase in our 2017 guidance.  As we reported late last month, we are looking for 2017 sales to be in the range of $560 million to $570 million resulting in net income attributable to Inter Parfums, Inc. of $1.25 to $1.27 per diluted share.” Guidance assumes the dollar remains at current levels.

 

Dividend

The Company’s regular quarterly cash dividend of $0.17 per share will be paid on October 13, 2017 to shareholders of record on September 29, 2017.

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, August 8, 2017.  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 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, bebe, Boucheron, Coach, Dunhill, Hollister, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Oscar de la Renta, Paul Smith, Repetto, Rochas, Shanghai Tang, 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, 2016 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,

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

Net sales

 

$            129,136

 

$            117,157

 

$            272,194

 

$            228,679

 

 

 

 

 

 

 

 

 

Cost of sales

 

                45,193

 

                42,729

 

                98,181

 

                82,933

 

 

 

 

 

 

 

 

 

Gross margin

 

                83,943

 

                74,428

 

              174,013

 

              145,746

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                69,468

 

                62,969

 

              133,367

 

              116,757

 

 

 

 

 

 

 

 

 

Income from operations

 

                14,475

 

                11,459

 

                40,646

 

                28,989

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     727

 

                     693

 

                     999

 

                  1,666

        (Gain) loss on foreign currency

 

                     817

 

                    (661)

 

                     973

 

                       53

        Interest income

 

                    (900)

 

                    (602)

 

                 (2,173)

 

                 (1,956)

 

 

 

 

 

 

 

 

 

 

 

                     644

 

                    (570)

 

                    (201)

 

                    (237)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                13,831

 

                12,029

 

                40,847

 

                29,226

 

 

 

 

 

 

 

 

 

Income taxes

 

                  4,620

 

                  4,300

 

                13,469

 

                12,049

 

 

 

 

 

 

 

 

 

Net income

 

                  9,211

 

                  7,729

 

                27,378

 

                17,177

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                  2,467

 

 

                  1,898

 

 

                  7,261

 

 

                  4,012

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$                6,744

 

 

$                5,831

 

 

$              20,117

 

 

$              13,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.22

 

               $0.19

 

             $0.65

 

             $0.42

           Diluted

 

               $0.22

 

               $0.19

 

             $0.64

 

             $0.42

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,169

 

                31,055

 

                31,157

 

                31,047

           Diluted

 

                31,281

 

                31,160

 

                31,268

 

                31,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               $0.17

 

               $0.15

 

               $0.34

 

               $0.30

 


 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

June 30,

2017

 

December 31,
2016

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$               116,772

 

$               161,828

        Short-term investments

 

                 123,805

 

                   94,202

        Accounts receivable, net

 

                 119,364

 

                 104,819

        Inventories

 

                 136,909

 

                   96,977

        Receivables, other

 

                     1,810

 

                     7,433

        Other current assets

 

                   10,246

 

                     6,240

        Income tax receivable

 

                        765

 

                        626

 

 

 

 

 

                          Total current assets

 

                 509,671

 

                 472,125

 

 

 

 

 

Equipment and leasehold improvements, net

 

                   10,370

 

                   10,076

 

 

 

 

 

Trademarks, licenses and other intangible assets, net

 

                 195,596

 

                 183,868

Deferred tax assets

 

                     8,649

 

                     8,090

 

 

 

 

 

Other assets

 

                     8,184

 

                     8,250

 

 

 

 

 

Total assets

 

$               732,470

 

$               682,409

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

        Current portion of long-term debt

 

$                 23,262

 

  $               21,498

        Accounts payable – trade

 

                   67,456

 

                   49,507

        Accrued expenses

 

                   52,397

 

                   62,609

        Income taxes payable

 

                     3,489

 

                     3,331

        Dividends payable

 

                     5,299

 

                     5,293

 

 

 

 

 

                          Total current liabilities

 

                 151,903

 

                 142,238

 

 

 

 

 

Long-term debt, less current portion

 

                   45,881

 

                   53,064

Deferred tax liability

 

                     4,286

 

                     3,449

 

 

 

 

 

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 31,171,908 and 31,138,318 shares at

June 30, 2017 and December 31, 2016, respectively

 

 

 

                          31

 

 

 

                          31

Additional paid-in capital

 

                   64,196

 

                   63,103

Retained earnings

 

                 412,580   

 

                 402,714

Accumulated other comprehensive loss

 

                  (33,406)

 

                  (57,982)

Treasury stock, at cost, 9,864,805 common shares at June 30, 2017 and December 31, 2016, respectively

 

 

                  (37,475)

 

 

                  (37,475)

 

 

 

 

 

                   Total Inter Parfums, Inc. shareholders’ equity

 

                 405,926

 

                 370,391

 

 

 

 

 

Noncontrolling interest

 

                 124,474

 

                 113,267

 

 

 

 

 

                          Total equity

 

                 530,400

 

                 483,658

 

 

 

 

 

Total liabilities and equity

 

$               732,470

 

$               682,409