FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2018 SECOND QUARTER RESULTS

 

Net Income Increases 61.6% on 15.7% Increase in Net Sales

 

New York, New York, August 7, 2018: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2018.  Of note, the average dollar/euro ratio for the current second quarter is 1.19, up 8% from 1.10 in the second quarter of 2017. 

 

Second Quarter 2018 Compared to Second Quarter 2017:

·   Net sales were $149.4 million, up 15.7% from $129.1 million, at comparable foreign currency exchange rates, net sales increased 12.3%;

·   Net sales by European based operations rose 8.3% to $115.6 million from $106.7 million;

·   Net sales by U.S. based operations increased 50.8% to $33.8 million, compared to $22.4 million;

·   Gross margin was 64.0% compared to 65.0%;

·   S,G&A expenses as a percentage of net sales were 51.5% compared to 53.8%

·   Operating income increased 29.7% to $18.8 million from $14.5 million;

·   Operating margin rose to 12.6% compared to 11.2%;

·   The effective income tax rate was 30.2% compared to 33.4%;  

·   Net income attributable to Inter Parfums, Inc. increased 61.6% to $10.9 million from $6.7 million and;

·   Net income attributable to Inter Parfums, Inc. per diluted share rose 59.1% to $0.35 from $0.22.

 

Discussing European based operations, Jean Madar, Chairman & CEO of Inter Parfums, Inc., stated, “As we reported last month, second quarter sales growth was primarily attributable to recurring sales of established fragrances and brand extensions by three of our largest brands, Jimmy Choo, Coach and Lanvin, for which comparable quarter sales rose 8.2%, 98.5% and 7.1%, respectively.  One such brand extension that took place this spring was the debut of Coach Floral, which helped elevate Coach into third place among our largest fragrance brands through the first half of 2018.  We also launched Jimmy Choo Man Blue this spring, further building upon the Jimmy Choo Man franchise. We entered the second half with Montblanc brand sales running 12% ahead of the first half of 2017.  The 33% first quarter increase in Montblanc brand sales offset the 9.8% second quarter sales decline.  We are encouraged by the comparable quarter upturn in Karl Lagerfeld brand sales, due in great part to Les Parfums Matières, a duo launched in the second half of 2017.

 

Moving on to U.S operations, Mr. Madar noted, “Anna Sui fragrance sales performed extremely well during the second quarter due to the brand’s popularity in the fast-growing Asian market.  Dunhill is still a star performer thanks to the Icon fragrance family, and the recent launch of Dunhill Century.  Oscar de la Renta legacy scents and Bella Blanca, which debuted in the first quarter, supported growth in brand sales.  We are also very pleased by the successful launch of two brand extensions for the Abercrombie & Fitch First Instinct fragrance family. Lastly, the inclusion of legacy GUESS fragrance sales toward the end of the second quarter factored into the nearly 51% increase in net sales.” 

 


 

Highlighting new product launches scheduled for the second half, Mr. Madar noted, “For European operations, Jimmy Choo Fever debuted in France in July and will be on U.S. shelves beginning in September.  Also last month, we unveiled Éclat de Nuit for Lanvin.  In addition, we will be introducing two men’s scents, Coach Platinum in September and Rochas Moustache the following month.  For U.S. operations, we are debuting Flight of Fancy Spirit for Anna Sui and rolling out Century, a new pillar by Dunhill.  Also this summer, Abercrombie & Fitch adds First Instinct Blue for women to its fragrance portfolio and for Hollister, an entirely new fragrance duo, Festival Vibes, comes to market.”

 

Mr. Madar concluded, “We are very encouraged by the year-to-date sales growth across all regions.  Through the first half of the year, our three largest markets, North America, Western Europe and Asia, achieved sales growth of 17.8%, 9.0% and 31.5%, respectively, compared to the first half of 2017.   Similarly, our next three markets ranked by size, the Middle East, Central and South America and Eastern Europe, have grown sales by 22.5%, 13.0% and 24.1%, respectively.” 

 

Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “The second quarter dollar/euro ratio had less of an impact on our sales and gross margin than in the first quarter, when the U.S. dollar/euro exchange rate increased 16% to 1.23, as compared to 1.06 in the first quarter of 2017.  The gross margin generated by European operations in the second quarter of 2018 declined slightly to 68.1% from 68.5% in the prior year’s second quarter, while gross margin for U.S. operations was 50.2%, up from 48.5% in the corresponding period last year due to increased sales of higher margin prestige products under licenses.”

 

He continued, “In the current second quarter, two significant swing items below the operating income line magnified the strong operating results.   Firstly, there was a $1.5 million gain on foreign currency versus the $0.8 million loss on foreign currency in the second quarter of 2017.  Secondly, our effective tax rate was 30% in the current second quarter versus 33% in the same period last year.”  

 

Mr. Greenberg also pointed out, “We closed the quarter with working capital of $372 million, including approximately $223 million in cash, cash equivalents and short-term investments, a working capital ratio of nearly 3.2 to 1 and $58 million of long-term debt including current maturities incurred in connection with the 2015 Rochas brand acquisition.”

 

Affirms 2018 Guidance

Mr. Greenberg concluded, “As we reported last month, we continue to look for 2018 net sales to approximate $665 million and net income per diluted share attributable to Inter Parfums, Inc. to come in at $1.59.  Guidance assumes the dollar remains at current levels.”  

 

Dividend

The Company’s regular quarterly cash dividend of $0.21 per share will be paid on October 15, 2018 to shareholders of record on September 28, 2018.

 


 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Wednesday, August 8, 2018.  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, 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, 2017 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,

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Net sales

 

$            149,367

 

$            129,136

 

$            321,133

 

$            272,194

 

 

 

 

 

 

 

 

 

Cost of sales

 

                53,713

 

                45,193

 

              119,851

 

                98,181

 

 

 

 

 

 

 

 

 

Gross margin

 

                95,654

 

                83,943

 

              201,282

 

              174,013

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                76,885

 

                69,468

 

              152,117

 

              133,367

 

 

 

 

 

 

 

 

 

Income from operations

 

                18,769

 

                14,475

 

                49,165

 

                40,646

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     568

 

                     727

 

                  1,030

 

                     999

        (Gain) loss on foreign currency

 

                 (1,500)

 

                     817

 

                 (1,295)

 

                     973

        Interest income

 

                    (729)

 

                    (900)

 

                 (2,474)

 

                 (2,173)

 

 

 

 

 

 

 

 

 

 

 

                 (1,661)

 

                     644

 

                 (2,739)

 

                    (201)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                20,430

 

                13,831

 

                51,904

 

                40,847

 

 

 

 

 

 

 

 

 

Income taxes

 

                  6,171

 

                  4,620

 

                15,783

 

                13,469

 

 

 

 

 

 

 

 

 

Net income

 

                14,259

 

                  9,211

 

                36,121

 

                27,378

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                  3,360

 

 

                  2,467

 

 

                  9,313

 

 

                  7,261

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$              10,899

 

 

$                6,744

 

 

$              26,808

 

 

$              20,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.35

 

               $0.22

 

             $0.86

 

             $0.65

           Diluted

 

               $0.35

 

               $0.22

 

             $0.85

 

             $0.64

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,299

 

                31,169

 

                31,283

 

                31,157

           Diluted

 

                31,490

 

                31,281

 

                31,459

 

                31,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               $0.21

 

               $0.17

 

               $0.42

 

               $0.34

 


 

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

June 30,

2018

 

December 31,
2017

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$               145,318

 

$               208,343

        Short-term investments

 

                   77,562

 

                   69,899

        Accounts receivable, net

 

                 140,026

 

                 120,749

        Inventories

 

                 169,323

 

                 137,058

        Receivables, other

 

                     2,424

 

                     2,405

        Other current assets

 

                     7,797

 

                     7,356

        Income taxes receivable

 

                        677

 

                     3,468

 

 

 

 

 

                          Total current assets

 

                 543,127

 

                 549,278

 

 

 

 

 

Equipment and leasehold improvements, net

 

                   10,117

 

                   10,330

 

 

 

 

 

Trademarks, licenses and other intangible assets, net

 

                 210,677

 

                 200,495

Deferred tax assets

 

                   10,851

 

                     9,658

 

 

 

 

 

Other assets

 

                     7,720

 

                     8,011

 

 

 

 

 

Total assets

 

$               782,492

 

$               777,772

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

        Current portion of long-term debt

 

$                 23,610

 

$                 24,372

        Accounts payable – trade

 

                   66,047

 

                   52,609

        Accrued expenses

 

                   69,185

 

                   81,843

        Income taxes payable

 

                     6,055

 

                     1,722

        Dividends payable

 

                     6,577

 

                     6,561

 

 

 

 

 

                          Total current liabilities

 

                 171,474

 

                 167,107

 

 

 

 

 

Long–term debt, less current portion

 

                  34,501

 

                  36,207

 

 

 

 

 

Deferred tax liability

 

                     3,706

 

                     3,821

 

 

 

 

 

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 31,318,273 and 31,241,548 shares at

June 30, 2018 and December 31, 2017, respectively

 

 

 

                          31

 

 

 

                          31

Additional paid-in capital

 

                   67,934

 

                   66,004

Retained earnings

 

                 436,605

 

                 422,570

Accumulated other comprehensive loss

 

                  (28,146)

 

                  (17,832)

Treasury stock, at cost, 9,864,805 shares at June 30, 2018 and December 31, 2017

 

 

                  (37,475)

 

 

                  (37,475)

 

 

 

 

 

                          Total Inter Parfums, Inc. shareholders’ equity

 

                 438,949

 

                 433,298

 

 

 

 

 

Noncontrolling interest

 

                 133,862

 

                 137,339

 

 

 

 

 

                          Total equity

 

                 572,811

 

                 570,637

 

 

 

 

 

Total liabilities and equity

 

$               782,492

 

$               777,772