INTER PARFUMS, INC. REPORTS 2016 SECOND QUARTER RESULTS

 

NET SALES UP 14.8%

NET INCOME ATTRIBUTABLE TO INTER PARFUMS, INC. UP 34.0%

 

New York, New York, August 9, 2016: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2016. 

 

Second Quarter 2016 Compared to Second Quarter 2015:

·   Net sales were $117.2 million, up 14.8% from $102.0 million; at comparable foreign currency exchange rates, net sales increased 14.2%;

·   Net sales by European based operations rose 14.8% to $88.6 million compared to $77.1 million and net sales by U.S. based operations increased 14.8% to $28.6 million compared to $24.9 million;

·   Gross margin was 63.5% of net sales compared to 59.1%;

·   S,G&A expenses as a percentage of net sales was 53.7% compared to 51.1%;

·   Operating income increased 39.0% to $11.5 million from $8.2 million;

·   Operating margin rose to 9.8% compared to 8.1%; and,

·   Net income attributable to Inter Parfums, Inc. increased 34.0% to $5.8 million or $0.19 per diluted share compared to $4.4 million or $0.14 per diluted share.

 

Discussing the Company’s European based operations, Jean Madar, Chairman & CEO of Inter Parfums, Inc., stated, “Once again, Montblanc, our largest brand, drove our top line growth with brand sales of $26.3 million, up 32% from last year’s second quarter.  This growth was primarily due to strong sales of the newly launched Legend Spirit line and the ongoing success of the original Legend line.  Our second largest brand, Jimmy Choo, also had a strong second quarter with brand sales up 43% to $22 million, reflecting wider distribution of Illicit, which debuted last year, and the steady performance of Jimmy Choo Man, which launched in 2014.  Rochas fragrances contributed $8.9 million to second quarter sales resulting from sales of legacy scents in the brand’s core markets of Spain and France.  Lanvin fragrance sales declined 19% to $12.4 million due primarily to the economic slowdown in two of its primary markets, Russia and China. We hope to counter this trend with a new Lanvin women's line Modern Princess, launching in selected markets this fall and internationally in 2017.

 

“Our U.S. based operations delivered solid growth in the second quarter,” continued Mr. Madar. “The launches of our first new Abercrombie & Fitch men’s scent, First Instinct, and the Hollister duo, Wave, began in late spring and were major contributors to our second quarter sales growth.  In addition, Dunhill fragrances continue to be consistent top performers, achieving an increase of 23% in brand sales for the period.”

 

Regarding sales drivers in the second half of the year, Mr. Madar pointed to the debut of the first Coach scent for women, a signature scent aptly named Coach, and the continued rollout of the new Abercrombie & Fitch and Hollister scents, plus the launch of Icon Elite by Dunhill.

 

Mr. Madar went on to say, “Thus far this year, our two largest markets were also our two fastest growing markets with sales in Western Europe and North America up 44.6% and 10.5%, respectively.  Despite negative market conditions in China, our overall sales in Asia, our third largest market, are slightly ahead of the first half of last year.”

 


 

Discussing factors affecting second quarter profitability, Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “The improvement in our blended gross profit margin was attributable to both our European and U.S. operations.  For European operations, gross profit margin was 67% as compared to 63% in last year’s second quarter with the increase primarily the result of increased product sales through our own distribution subsidiaries directly to retailers.  In addition to increased Montblanc and Jimmy Choo brand sales to retailers through our United States distribution subsidiary, a significant portion of Rochas brand sales were to retailers through our own distribution in France and Spain.  For U.S. operations, gross profit margin was 53% as compared to 47% in last year’s second quarter, due primarily to the shift in product mix favoring higher margin prestige product sales.  For both European and U.S. operations, the increase in selling, general and administrative expense, both in dollars and as a percent of sales, was primarily due to higher promotional and advertising expenses, which reflects our commitment to supporting new product launches, and sustaining the sales momentum of our best sellers.” 

 

He continued, “Below the operating line, the main noteworthy second quarter comparison would be the $661,000 foreign currency gain in the current period versus the $80,000 foreign currency loss in the same period one year earlier.  Our effective income tax rate was 36% as compared to 34%, however, we expect our effective rate, excluding the previously reported pending settlement with the French Tax Authorities, to be approximately 35% for the full year ending December 31, 2016.”

 

Mr. Greenberg also pointed out, “Our balance sheet remains very strong.  We closed the quarter with working capital of $338 million including $232 million in cash, cash equivalents and short-term investments.  Our long-term debt, a five-year term loan aggregated $89.9 million at mid-year.”

 

2016 Guidance Affirmed

Mr. Greenberg concluded by saying, “We continue to expect 2016 net sales to be in the range of $500 million to $510 million.  Excluding the impact of the previously reported tax settlement, we are on track to meet our net income attributable to Inter Parfums, Inc. goal of between $1.05 and $1.10 per diluted share; inclusive of the tax settlement, we expect net income attributable to Inter Parfums, Inc. to come in between $1.01 and $1.06 per diluted share.”  Guidance assumes the dollar remains at current levels.

 

Dividend

The Company’s regular quarterly cash dividend of $0.15 per share will be paid on October 14, 2016 to shareholders of record on September 30, 2016.

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Wednesday, August 10, 2016.  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.


 

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, Balmain, Banana Republic, 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, 2015 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,

 

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Net sales

 

$            117,157

 

$            102,021

 

$            228,679

 

$            211,270

 

 

 

 

 

 

 

 

 

Cost of sales

 

                42,729

 

                41,696

 

                82,933

 

                83,335

 

 

 

 

 

 

 

 

 

Gross margin

 

                74,428

 

                60,325

 

              145,746

 

              127,935

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                62,969

 

                52,083

 

              116,757

 

                98,627

 

 

 

 

 

 

 

 

 

Income from operations

 

                11,459

 

                  8,242

 

                28,989

 

                29,308

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     693

 

                     613

 

                  1,666

 

                     771

        (Gain) loss on foreign currency

 

                    (661)

 

                       80

 

                       53

 

                  2,086

        Interest income

 

                    (602)

 

                    (776)

 

                 (1,956)

 

                 (1,972)

 

 

 

 

 

 

 

 

 

 

 

                    (570)

 

                      (83)

 

                    (237)

 

                     885

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                12,029

 

                  8,325

 

                29,226

 

                28,423

 

 

 

 

 

 

 

 

 

Income taxes

 

                  4,300

 

                  2,805

 

                12,049

 

                  9,598

 

 

 

 

 

 

 

 

 

Net income

 

                  7,729

 

                  5,520

 

                17,177

 

                18,825

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                  1,898

 

 

                  1,169

 

 

                  4,012

 

 

                  4,467

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$                5,831

 

 

$                4,351

 

 

$              13,165

 

 

$              14,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.19

 

               $0.14

 

             $0.42

 

             $0.46

           Diluted

 

               $0.19

 

               $0.14

 

             $0.42

 

             $0.46

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,055

 

                30,988

 

                31,047

 

                30,984

           Diluted

 

                31,138

 

                31,107

 

                31,121

 

                31,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               $0.15

 

               $0.13

 

               $0.30

 

               $0.26

 

 


 

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

June 30,

2016

 

December 31,
2015

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$               115,850

 

$               176,967

        Short-term investments

 

                 115,884

 

                   82,847

        Accounts receivable, net

 

                 101,001

 

                   95,082

        Inventories

 

                 124,254

 

                   98,346

        Receivables, other

 

                     2,075

 

                     2,422

        Other current assets

 

                     6,765

 

                     5,811

        Income tax receivable

 

                     1,058

 

                        100

        Deferred tax assets

 

                     8,079

 

                     7,182

 

 

 

 

 

                          Total current assets

 

                 474,966

 

                 468,757

 

 

 

 

 

Equipment and leasehold improvements, net

 

                   10,688

 

                     9,333

 

 

 

 

 

Trademarks, licenses and other intangible assets, net

 

                 202,515

 

                 201,335

 

 

 

 

 

Other assets

 

                     8,592

 

                     8,234

 

 

 

 

 

Total assets

 

$               696,761

 

$               687,659

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

        Current portion of long-term debt

 

$                 22,734

 

  $               22,163

        Accounts payable – trade

 

                   60,672

 

                   50,636

        Accrued expenses

 

                   42,605

 

                   46,890

        Income taxes payable

 

                     6,441

 

                     7,359

        Dividends payable

 

                     4,659

 

                     4,035

 

 

 

 

 

                          Total current liabilities

 

                 137,111

 

                 131,083

 

 

 

 

 

Long-term debt, less current portion

 

                   67,176

 

                   76,443

Deferred tax liability

 

                     3,724

 

                     3,746

 

 

 

 

 

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 31,058,965 and 31,037,915 shares at

June 30, 2016 and December 31, 2015, respectively

 

 

 

                          31

 

 

 

                          31

Additional paid-in capital

 

                   62,818

 

                   62,030

Retained earnings

 

                 392,284   

 

                 388,434

Accumulated other comprehensive loss

 

                  (42,421)

 

                  (48,091)

Treasury stock, at cost, 9,880,058 common shares at June 30, 2016 and December 31, 2015, respectively

 

 

                  (36,817)

 

 

                  (36,817)

 

 

 

 

 

                   Total Inter Parfums, Inc. shareholders’ equity

 

                 375,895

 

                 365,587

 

 

 

 

 

Noncontrolling interest

 

                 112,855

 

                 110,800

 

 

 

 

 

                          Total equity

 

                 488,750

 

                 476,387

 

 

 

 

 

Total liabilities and equity

 

$               696,761

 

$               687,659