INTER PARFUMS, INC. REPORTS 2018 THIRD QUARTER RESULTS

 

INCREASES DIVIDEND 31%

 

New York, New York, November 5, 2018: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2018. 

 

Third Quarter 2018 Compared to Third Quarter 2017:

·   Net sales were $177.2 million, up 4.5% from $169.5 million; at comparable foreign currency exchange rates, net sales increased 5.4%;

·   Net sales by European based operations rose 2.4% to $137.8 million from $134.6 million;

·   Net sales by U.S. based operations were $39.4 million, up 12.9% from $34.9 million;

·   Gross margin was 61.6% compared to 61.0%;

·   S,G&A expenses as a percentage of net sales were 41.9% compared to 41.5%;

·   Operating income increased 5.5% to $35.0 million from $33.2 million;

·   Operating margin rose to 19.7% from 19.6%;

·   The effective income tax rate was 28.6% compared to 32.9%;  

·   Net income attributable to Inter Parfums, Inc. increased 10.9% to $18.9 million compared to $17.1 million; and,

·   Net income attributable to Inter Parfums, Inc. per diluted share rose 9.1% to $0.60 from $0.55.

 

Discussing European based operations, Jean Madar, Chairman & CEO of Inter Parfums stated, “Jimmy Choo and Coach, two of our largest brands, achieved 19.7% and 40.9% third quarter sales growth, respectively, all the more impressive in the absence of major new product launches.  In fact, the nearly 12% year-to-date increase in net sales by European based operations was primarily due to brand extensions for the best sellers among our largest brands, energizing product selections within our other brands and expanding distribution, all the while supporting these efforts with well-planned and executed advertising and promotional programs with a far greater emphasis on digital media.”

 

On the subject of U.S. based operations, Mr. Madar continued, “The inclusion of legacy GUESS fragrances, which began in the second quarter of 2018, factored into the increase in net sales. Also factoring into the third quarter sales growth was the successful launch of brand extensions for the Abercrombie & Fitch First Instinct fragrance family and Hollister’s Festival Vibes duo. Additionally, with the popularity of Anna Sui fragrances throughout Asia, we continue to enjoy dramatic increases in brand sales in that region.”

 

Mr. Madar noted, “Nearly all of the regions in which we do business have shown year-to-date sales growth.  Our three largest markets, North America, Western Europe and Asia, achieved sales growth of 18%, 9% and 22%, respectively, compared to the first nine months of 2017.  The Middle East and Eastern Europe, have grown sales by 11% and 12%, respectively, while Central and South America sales were essentially flat compared to the same period last year.” 

 

Discussing new product launches for 2019 he continued, “On both sides of the Atlantic, we have ambitious plans for the coming year.  With regard to European operations, our largest brands, Montblanc and Jimmy Choo, both have new men’s scents debuting and there will be new women’s fragrances for Coach and Lanvin.  For U.S. operations, 2019 launches are for the most part brand extensions including one for Anna Sui’s Fantasia, an addition to the GUESS 1981 fragrance family, a sister scent for Oscar de la Renta’s Bella Blanca, and a flanker for the Dunhill Century fragrance line. among others.”

 

 

On the subject of newer brands under the U.S. based operations, Mr. Madar noted, “We are developing a four-scent super luxury collection for Graff, along with an amenities line, geared for five-star hotels.  As we recently announced, we have initiated a direct-to-the consumer e-commerce enterprise in partnership with IMG Models, and our first multi-scent fragrance collaboration with super model Lily Aldridge, is planned for next year.”

 

Discussing profitability factors, Mr. Greenberg stated, “For European operations, gross profit margin was 65% in both the current and prior year’s third quarter and once again, the dollar/euro ratio had little impact on our gross margin.  For U.S. operations, gross profit margin rose to 50% as compared to 47% in the third quarter of 2017, with the improvement attributable to increased sales of higher margin prestige products under licenses.  For European operations, selling, general and administrative expenses increased 2% and represented 44% of net sales in both the current third quarter and the corresponding period of the prior year.   At the same time, selling, general and administrative expenses of our U.S. operations increased 25% and represented 35% of net sales compared to 32% in the corresponding period of the prior year with the increase directly associated with the increase in net sales of licensed products.”

 

He continued, “With regard to non-operating items, the loss on foreign currency increased to $1.1 million in the current third quarter, as compared to $0.3 million in last year’s third quarter, which was more than offset by a decrease in our effective tax rate to 29% in the current third quarter from 33% in last year’s third quarter.”

 

Mr. Greenberg also pointed out, “We closed the quarter with working capital of $383 million, including approximately $211 million in cash, cash equivalents and short-term investments, a working capital ratio of nearly 3.4 to 1 and $52.0 million of long-term debt, including current maturities, incurred in connection with the 2015 Rochas brand acquisition.”

 

Guidance

Mr. Greenberg concluded, “We continue to anticipate approximately $665 million in net sales for full year resulting in net income per diluted share attributable to Inter Parfums, Inc. of $1.61.  Guidance assumes the dollar remains at current levels.  As we reported last month, we have scheduled November 12, 2018, after the close of the market, for the release of our initial 2019 guidance.” 

 

Dividend Increase

The Board of Directors of Inter Parfums, Inc. authorized a 31% increase in the annual dividend to $1.10 per share.  The next quarterly cash dividend of $0.275 per share is payable on January 15, 2019 to shareholders of record on December 31, 2018. 


 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 am ET, on Tuesday, November 6, 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.

 

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, 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
September 30,

 

Nine Months Ended
September 30,

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Net sales

 

$            177,213

 

$            169,531

 

$            498,347

 

$            441,725

 

 

 

 

 

 

 

 

 

Cost of sales

 

                68,066

 

                66,059

 

              187,917

 

              164,240

 

 

 

 

 

 

 

 

 

Gross margin

 

              109,147

 

              103,472

 

              310,430

 

              277,485

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                74,169

 

                70,309

 

              226,286

 

              203,676

 

 

 

 

 

 

 

 

 

Income from operations

 

                34,978

 

                33,163

 

                84,144

 

                73,809

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     523

 

                     495

 

                  1,553

 

                  1,494

        (Gain) loss on foreign currency

 

                  1,109

 

                     335

 

                    (185)

 

                  1,308

        Interest income

 

                    (847)

 

                    (615)

 

                 (3,321)

 

                 (2,788)

 

 

 

 

 

 

 

 

 

 

 

                     785

 

                     215

 

                 (1,953)

 

                       14

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                34,193

 

                32,948

 

                86,097

 

                73,795

 

 

 

 

 

 

 

 

 

Income taxes

 

                  9,767

 

                10,845

 

                25,550

 

                24,314

 

 

 

 

 

 

 

 

 

Net income

 

                24,426

 

                22,103

 

                60,547

 

                49,481

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                  5,488

 

 

                  5,026

 

 

                14,801

 

 

                12,287

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$              18,938

 

 

$              17,077

 

 

$              45,746

 

 

$              37,194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.60

 

               $0.55

 

             $1.46

 

             $1.19

           Diluted

 

               $0.60

 

               $0.55

 

             $1.45

 

             $1.19

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,326

 

                31,175

 

                31,297

 

                31,163

           Diluted

 

                31,587

 

                31,307

 

                31,502

 

                31,281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               $0.21

 

               $0.17

 

               $0.63

 

               $0.51

 


 

 

 

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

September 30,

2018

 

December 31,
2017

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$               133,553

 

$               208,343

        Short-term investments

 

                   77,173

 

                   69,899

        Accounts receivable, net

 

                 164,574

 

                 120,749

        Inventories

 

                 161,459

 

                 137,058

        Receivables, other

 

                     2,146

 

                     2,405

        Other current assets

 

                     5,678

 

                     7,356

        Income taxes receivable

 

                     1,107

 

                     3,468

 

 

 

 

 

                          Total current assets

 

                 545,690

 

                 549,278

 

 

 

 

 

Equipment and leasehold improvements, net

 

                     9,854

 

                   10,330

 

 

 

 

 

Trademarks, licenses and other intangible assets, net

 

                 207,828

 

                 200,495

Deferred tax assets

 

                   10,941

 

                     9,658

 

 

 

 

 

Other assets

 

                     8,840

 

                     8,011

 

 

 

 

 

Total assets

 

$               783,153

 

$               777,772

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

        Current portion of long-term debt

 

$                 23,418

 

$                 24,372

        Accounts payable – trade

 

                   47,452

 

                   52,609

        Accrued expenses

 

                   73,263

 

                   81,843

        Income taxes payable

 

                   11,660

 

                     1,722

        Dividends payable

 

                     6,580

 

                     6,561

 

 

 

 

 

                          Total current liabilities

 

                 162,373

 

                 167,107

 

 

 

 

 

Long–term debt, less current portion

 

                  28,626

 

                  36,207

 

 

 

 

 

Deferred tax liability

 

                     3,552

 

                     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 31,333,842 and 31,241,548 shares at

September 30, 2018 and December 31, 2017, respectively

 

 

 

                          31

 

 

 

                          31

Additional paid-in capital

 

                   68,665

 

                   66,004

Retained earnings

 

                 449,085

 

                 422,570

Accumulated other comprehensive loss

 

                  (30,423)

 

                  (17,832)

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

 

 

                  (37,475)

 

 

                  (37,475)

 

 

 

 

 

                          Total Inter Parfums, Inc. shareholders’ equity

 

                 449,883

 

                 433,298

 

 

 

 

 

Noncontrolling interest

 

                 138,719

 

                 137,339

 

 

 

 

 

                          Total equity

 

                 588,602

 

                 570,637

 

 

 

 

 

Total liabilities and equity

 

$               783,153

 

$               777,772