FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2020 THIRD QUARTER RESULTS

 

New York, New York, November 9, 2020: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2020.  Of note, the average dollar/euro exchange rate for the 2020 third quarter is 1.17 as compared to 1.11 in the third quarter of 2019, and 1.13 and 1.12 for the nine months ended September 30, 2020 and 2019, respectively.    

 

Third Quarter 2020 Compared to Third Quarter 2019:

·   Net sales were $160.6 million, down 16.0% from $191.2 million; at comparable foreign currency exchange rates, net sales declined 18.3%;

·   Net sales by European based operations declined 9.6% to $129.7 million from $143.6 million;

·   Net sales by U.S. based operations dropped 35.1% to $30.9 million from $47.6 million;

·   Gross margin rose to 60.5% compared to 59.8%

·   S,G&A expenses as a percentage of net sales were 41.0% compared to 40.7%;

·   Operating income declined 14.4% to $31.4 million from $36.6 million;

·   Operating margin was 19.5% compared to 19.2%;

·   The effective income tax rate was 28.8% compared to 27.4%;

·   Net income attributable to Inter Parfums, Inc. declined 20.7% to $16.5 million from $20.8 million; and,

·   Net income attributable to Inter Parfums, Inc. per diluted share declined 21.2% to $0.52 from $0.66.

 

Thus, through the first nine months of 2020, net sales declined 33.7% to $355.0 million from $535.7 million, in the same period of the prior year.  At comparable foreign currency exchange rates, net sales declined  34.1%.  Net income attributable to Inter Parfums, Inc. was $23.5 million, down 54.9% from $52.1 million in the same period last year, while net income attributable to Inter Parfums, Inc. per diluted share declined 54.9% to $0.74 from $1.64. 

 

Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, “What a difference a quarter makes.  As compared to the preceding quarter, sales rallied across all of our markets, with the three largest, North America, Western Europe and Asia, achieving significant gains.  As a result, when compared to the second quarter, third quarter net sales increased 224%; gross margin rose 630 basis points; our operating margin returned to a more normalized level of 19.5%; and once again, our bottom line was solidly profitable.”    

 

Mr. Madar continued, “2020 has been a highly productive year, despite the hardships and disruptions caused by the  COVID-19 pandemic.  We added two new important luxury brands to our portfolio this year, MCM and Moncler, and made an equity investment in Divabox, the parent company of Origines-parfums, France’s third largest and fast growing player in the online beauty space.  We also introduced a limited number of new products and brand extensions in 2020, including Coach Dreams, L’Homme Rochas, Oscar de la Renta’s Bella Essence, and Abercrombie & Fitch Authentic Night.  Our 2021 new product launch schedule is far more prolific and ambitious, as are our advertising and promotional campaign plans.”   

 

He concluded, “We are adapting to a retail environment that is in flux with online commerce offsetting much of the shortfall from brick and mortar and travel retail outlets.  Our historic strengths, notably a very strong balance sheet, a rich, diverse and growing brand portfolio, a distribution network encompassing 120 countries, and a flexible and responsive supply chain, coupled with our COVID-19 defensive actions, including deferring new product launches and associated promotional expenses until 2021,  keeping a tight rein on other variable expenses and suspending the quarterly cash dividend, position Inter Parfums for a resumption of top and bottom line growth as the pandemic subsides.”

 

Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “For European operations, the third quarter gross profit margin was 62.4% as compared to 62.8% in last year’s third quarter with the weakened dollar responsible for the modest decline.  For the current nine month period, gross margin was 62.3% which, as previously reported, factors in the second quarter assumption of a return liability for products sold by the former licensee of a brand license we entered into in 2019.  In the same period last year, gross margin for European operations was 64.7%. For U.S. operations, third quarter gross profit margin was 52.5%, up from 51.0% reported for the prior year’s third quarter with the modest improvement attributable to product mix.”

 

Mr. Greenberg pointed out, “Cutting expenses wherever possible and appropriate has been a priority since the advent of the pandemic.  Stepping on the brakes had the desired result in the third quarter as S, G & A expenses were reduced by 15.4% as compared to last year’s third quarter, and represented 41.0% of net sales,  just slightly more than 40.7% in the third quarter of 2019.  For European operations S, G & A expenses declined 11.4% and represented 41.3% of 2020 third quarter net sales as compared to 42.1% in last year’s third quarter.  Our significantly smaller U.S. operations carry higher fixed costs that could not be leveraged as efficiently as those of our European operations with the decline in net sales.  Thus for U.S. operations S, G & A expenses decreased 29.2% and represented 39.7% of net sales as compared to 36.3% in last year’s third quarter.” 

 

Mr. Greenberg continued, “In response to the impact of the COVID-19 pandemic, most of our 2020 promotional programs, especially those for new product introductions, were postponed until 2021.  In the third quarter, promotion and advertising represented 10.9% of net sales, as compared to 15.0% in last year’s third quarter.  In dollars, that’s a savings of more than $11 million, bringing promotion and advertising included in S, G & A down to $17.6 million from $28.7 million in the third quarter of 2019.” 

           

Mr. Greenberg also pointed out, “We closed the quarter with working capital of $422.1 million, including approximately $204 million in cash, cash equivalents and short-term investments, a working capital ratio of 4.5 to 1 and only $19.4 million of long-term debt which includes borrowings made in connection with our equity stake in the parent company of origines-parfums.fr.”

 

Guidance

Mr. Greenberg concluded, “As we reported last month, we raised our 2020 net sales guidance to between $495 million and $500 million resulting in net income attributable to Inter Parfums, Inc. per diluted share in the range of $0.80 and $0.84.  Guidance assumes that the average dollar/euro exchange rate remains at current levels.  In addition, we will issue our initial 2021 guidance after the market closes on Tuesday, December 1, 2020.”

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, November 10, 2020.  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 in 1982, Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes and cosmetics as the exclusive worldwide licensee for Abercrombie & Fitch, Anna Sui, Boucheron, Coach, Dunhill, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade New York, MCM, Moncler, Montblanc, Oscar de la Renta, Paul Smith, Repetto, S.T. Dupont and Van Cleef & Arpels.  Inter Parfums is also the owner of Lanvin fragrances and the Rochas brand.  Through its global distribution network, the Company’s products are sold in over 120 countries.

 

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, 2019, the Quarterly Report on Form 10-Q filed for the third quarter of 2020 and the additional 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,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net sales

 

$           160,637

 

$           191,227

 

$           354,967

 

$           535,712

 

 

 

 

 

 

 

 

 

Cost of sales

 

                63,439

 

                76,790

 

             141,883

 

             204,459

 

 

 

 

 

 

 

 

 

Gross margin

 

                97,198

 

             114,437

 

             213,084

 

             331,253

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

                65,841

 

                77,793

 

             169,471

 

             238,860

 

 

 

 

 

 

 

 

 

Income from operations

 

                31,357

 

                36,644

 

                43,613

 

                92,393

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

        Interest expense

 

                     148

 

                     384

 

                  1,510

 

                  1,214

        (Gain) loss on foreign currency

 

                     891

 

                     121

 

                      (76)

 

                     818

        Interest income

 

                    (393)

 

                    (562)

 

                 (2,154)

 

                 (2,886)

 

 

 

 

 

 

 

 

 

 

 

                     646

 

                      (57)

 

                    (720)

 

                    (854)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

                30,711

 

                36,701

 

                44,333

 

                93,247

 

 

 

 

 

 

 

 

 

Income taxes

 

                  8,859

 

                10,043

 

                12,165

 

                26,012

 

 

 

 

 

 

 

 

 

Net income

 

                21,852

 

                26,658

 

                32,168

 

                67,235

 

 

 

 

 

 

 

 

 

         Less:  Net income attributable to the noncontrolling interest

 

 

                  5,314

 

 

                  5,810

 

 

                  8,688

 

 

                15,176

 

 

 

 

 

 

 

 

 

Net income attributable to

Inter Parfums, Inc.

 

 

$             16,538

 

 

$             20,848

 

 

$             23,480

 

 

$             52,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

           Basic

 

               $0.52

 

               $0.66

 

             $0.74

 

             $1.66

           Diluted

 

               $0.52

 

               $0.66

 

             $0.74

 

             $1.64

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

           Basic

 

                31,533

 

                31,452

 

                31,531

 

                31,444

           Diluted

 

                31,619

 

                31,676

 

                31,651

 

                31,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

               --

 

               $0.28

 

               $0.33

 

               $0.83

 


 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

September 30,

2020

 

December 31,
2019

Current assets:

 

 

 

 

        Cash and cash equivalents

 

$              133,350

 

$              192,417

        Short-term investments

 

                   70,685

 

                   60,714

        Accounts receivable, net

 

                 138,486

 

                 133,010

        Inventories

 

                 178,852

 

                 167,809

        Receivables, other

 

                     1,319

 

                     2,054

        Other current assets

 

                   18,032

 

                   17,123

        Income taxes receivable

 

                         624

 

                         169

 

 

 

 

 

                            Total current assets

 

                 541,348

 

                 573,296

 

 

 

 

 

Equipment and leasehold improvements, net

 

                   11,627

 

                   11,107

 

 

 

 

 

Right-of-use assets, net

 

                   25,525

 

                   28,359

Trademarks, licenses and other intangible assets, net

 

                 206,446

 

                 201,983

Deferred tax assets

 

                     9,748

 

                     8,004

 

 

 

 

 

Other assets

 

                   21,487

 

                     6,083

 

 

 

 

 

Total assets

 

$              816,181

 

$              828,832

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

        Current portion of long-term debt

 

$                   5,755

 

$                 12,326

        Current portion of lease liabilities

 

                     4,951

 

                     5,356

        Accounts payable – trade

 

                   27,321

 

                   54,098

        Accrued expenses

 

                   71,770

 

                   96,421

        Income taxes payable

 

                     9,450

 

                     5,865

        Dividends payable

 

                             --

 

                   10,399

 

 

 

 

 

                            Total current liabilities

 

                 119,247

 

                 184,465

 

 

 

 

 

Long–term debt, less current portion

 

                   19,384

 

                  10,734

 

 

 

 

 

Lease liabilities, less current portion

 

                   22,289

 

                   24,635

 

 

 

 

 

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 31,537,558 and 31,513,018 shares at

September 30, 2020 and December 31, 2019, respectively

 

 

 

                           32

 

 

 

                           31

Additional paid-in capital

 

                   73,268

 

                   70,664

Retained earnings

 

                 488,193

 

                 474,637

Accumulated other comprehensive loss

 

                  (24,558)

 

                  (39,853)

Treasury stock, at cost, 9,864,805 shares at September 30, 2020 and December 31, 2019

 

 

                  (37,475)

 

 

                  (37,475)

 

 

 

 

 

                            Total Inter Parfums, Inc. shareholders’ equity

 

                 499,460

 

                 468,004

 

 

 

 

 

Noncontrolling interest

 

                 155,801

 

                 140,994

 

 

 

 

 

                            Total equity

 

                 655,261

 

                 608,998

 

 

 

 

 

Total liabilities and equity

 

$              816,181

 

$              828,832