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8-K - 8-K - INTER PARFUMS INCs109344_8k.htm

 

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2017 FOURTH QUARTER AND YEAR END RESULTS

 

2017 Net Sales and Diluted EPS Increase by 13.5% and 24.2%, Respectively

 

New York, New York, March 13, 2018: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the fourth quarter ended December 31, 2017.

 

Fourth Quarter 2017 Compared to Fourth Quarter 2016:

Net sales were $149.5 million, up 10.9% from $134.8 million; at comparable foreign currency exchange rates, net sales increased 6%;

Net sales by European based operations rose 15.5% to $115.4 million from $99.9 million;

Net sales by U.S. based operations were $34.1 million, down 2.2% compared to $34.9 million;

Gross margin was 66.1% compared to 63.7%;

S,G&A expenses as a percentage of net sales were 61.4% compared to 59.0%;

Operating income was $4.8 million as compared to $5.4 million;

Net income attributable to Inter Parfums, Inc. increased 12.0% to $4.4 million compared $3.9 million; and,

Net income attributable to Inter Parfums, Inc. per diluted share rose 11.1% to $0.14 from $0.13.

 

Thus for the year as a whole, net sales increased 13.5% to $591.3 million, as compared to $521.1 million in 2016. At comparable foreign currency exchange rates, net sales increased 12%. Net income attributable to Inter Parfums, Inc. increased 24.8% to $41.6 million or $1.33 per diluted share from 2016’s $33.3 million or $1.07 per diluted share.

 

Jean Madar, Chairman & CEO of Inter Parfums stated, “In 2017, we grew our footprint in all of our markets. North America became our largest market with year-over-year sales gains of 19%. Second place Western Europe grew sales by 8% as did our third largest market, Asia. Central and South America, the Middle East and Eastern Europe achieved comparable year sales growth of 16%, 21% and 20%, respectively. Regarding European based operations, our three largest brands all posted growth for the year, with Montblanc up 4%, Jimmy Choo up 20%, and Lanvin up 5%. In fact, in 2017, Jimmy Choo fragrance sales topped the $100 million mark joining Montblanc in that exclusive club. Our newer brands performed exceptionally well last year, with Coach and Rochas brand sales growing 149% and 34%, respectively, versus one year earlier. Of note, our first Coach fragrance only launched mid-2016, and today that brand is our fourth largest, which was achieved without a legacy fragrance business. As we’ve reported, we have several brand extensions launching this year, including Coach Floral and Lanvin Modern Princess Eau Sensuelle, both of which recently debuted, plus new extensions for Lanvin’s Éclat d’Arpège and Coach for Men.”

 

Moving on to U.S. based operations, Mr. Madar noted, “Our two largest brands in this group, Dunhill and Oscar de la Renta fragrances, both performed very well. With the recent introduction of Bella Blanca by Oscar de la Renta, our 2018 launch schedule is on track with new products for Abercrombie & Fitch, Hollister, Dunhill, and Anna Sui coming to market throughout the year. A big boost in incremental sales is expected to come from the addition of GUESS legacy fragrances to our sales mix after the license starts on April 1, 2018. We expect that right out of the gate, the GUESS run rate will make it the largest brand in this group.”

 

 

 

Inter Parfums, Inc. News ReleasePage 2

March 13, 2018

 

Highlighting several key operating factors impacting profitability, Mr. Greenberg stated, “The improvement in gross margin reflects increased sales of higher margin products by our European operations, much of which was through our distribution subsidiaries that sell product directly to retailers. Of special note, sales of Montblanc, Jimmy Choo and Coach products to retailers in the U.S. are conducted by a Company-owned distribution subsidiary, and sales of Rochas brand fragrance are concentrated in France, where we sell directly to retailers, and in Spain, where we sell through our distribution subsidiary. Selling, general and administrative expenses rose 14% compared to 2016, but as a percentage of net sales, were 50% for both 2017 and 2016. Promotion and advertising included selling, general and administrative expenses, generally peaks in the fourth quarter and 2017 was no exception; as a percentage of sales promotion and advertising was 20.9% in 2017 and 19.0% in 2016.”

 

Mr. Greenberg pointed out, “For many years, our focus has been on growing our prestige fragrance business and brand portfolio; therefore during the fourth quarter of 2017, we set in motion a plan to discontinue several of our small mass market product lines over the next few years. In that regard, as of December 31, 2017 we recorded an impairment loss of $2.1 million and increased our inventory obsolescence reserves by $0.5 million.”

 

The Company’s effective income tax rate was 29.2% in 2017 and 35.5% in 2016 noting that in 2017, the French Constitutional Court released a decision declaring that the nation’s 3% tax on dividends or deemed dividends enacted in 2012, was unconstitutional. Inter Parfums has filed a claim for a $3.6 million refund for these taxes paid since 2015 and recorded the refund claim in its 2017 financial statements. Partially offsetting the tax refund was a nonrecurring expense of $1.1 million related to revaluation of deferred tax assets and liabilities caused by the new lower corporate tax rate resulting from the Tax Cuts and Jobs Act.

 

Mr. Greenberg also pointed out, “In 2017, cash provided by operating activities aggregated $35.9 million and we closed the year with working capital of $382 million, including approximately $278 million in cash, cash equivalents and short-term investments, a working capital ratio of almost 3.3 to 1 and $60.6 million of long-term debt, including current maturities, incurred in connection with the 2015 Rochas brand acquisition.”

 

2018 Guidance Excluding GUESS Contribution

Mr. Greenberg noted, “Once we purchase the GUESS inventory from the brand’s former licensee and determine how long it will take to build new inventory, we plan to increase our 2018 guidance to factor in the GUESS contribution, which we anticipate will begin in the second quarter of the year. Our target date for announcing the expected increase in our sales and earnings guidance to include GUESS is when we announce 2018 first quarter results in May. Thus for the time being, we are maintaining our previously disclosed 2018 guidance which calls for net sales of approximately $620 million and net income attributable to Inter Parfums, Inc. of approximately $1.44 per diluted share.” Guidance for 2018 assumes the dollar remains at current levels.

 

Dividend

The Company’s regular quarterly cash dividend of $0.21 per share is payable on April 13, 2018 to shareholders of record on March 30, 2018.

 

 

 

Inter Parfums, Inc. News ReleasePage 3

March 13, 2018

 

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 am ET, on Wednesday, March 14, 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, bebe, Boucheron, Coach, Dunhill, 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

 

 

 

Inter Parfums, Inc. News ReleasePage 4

March 13, 2018

 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

(Unaudited)

 

   Three Months Ended
December 31,
   Twelve Months Ended
December 31,
 
   2017   2016   2017   2016 
                 
Net sales  $149,526   $134,771   $591,251   $521,072 
                     
Cost of sales   50,725    48,877    214,965    194,601 
                     
Gross margin   98,801    85,894    376,286    326,471 
                     
                     
Selling, general and administrative expenses   91,864    79,503    295,540    258,787 
Gain on buyout of license       (4,652)       (4,652)
Impairment loss   2,123    5,658    2,123    5,658 
Income from operations
   4,814    5,385    78,623    66,678 
                     
Other expenses (income):                    
Interest expense   498    159    1,992    2,340 
Loss on foreign currency   241    207    1,549    595 
Interest income   (195)   (609)   (2,983)   (3,331)
    544    (243)   558    (396)
                     
Income before income taxes   4,270    5,628    78,065    67,074 
                     
Income taxes   (1,502)   1,036    22,812    23,826 
                     
Net income   5,772    4,592    55,253    43,248 
                     
         Less:  Net income attributable to the noncontrolling interest   1,372    665    13,659    9,917 
Net income attributable to Inter Parfums, Inc.
  $4,400   $3,927   $41,594   $33,331 
                     
Net income attributable to Inter Parfums, Inc. common shareholders:                    
   Basic  $0.14   $0.13   $1.33   $1.07 
   Diluted  $0.14   $0.13   $1.33   $1.07 
                     
Weighted average number of shares outstanding:                    
   Basic   31,200    31,115    31,172    31,072 
   Diluted   31,378    31,231    31,305    31,176 
                     
Dividends declared per share  $0.21   $0.17   $0.72   $0.62 

 

 

 

Inter Parfums, Inc. News ReleasePage 5

March 13, 2018

 

INTER PARFUMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2017 and 2016
(In thousands except share and per share data)

 

         
   2017   2016 
Assets          
Current assets:          
Cash and cash equivalents  $208,343   $161,828 
Short-term investments   69,899    94,202 
Accounts receivable, net   120,749    104,819 
Inventories   137,058    96,977 
Receivables, other   2,405    7,433 
Other current assets   7,356    6,240 
Income taxes receivable   3,468    626 
Total current assets   549,278    472,125 
Equipment and leasehold improvements, net   10,330    10,076 
Trademarks, licenses and other intangible assets, net   200,495    183,868 
Deferred tax assets   9,658    8,090 
Other assets   8,011    8,250 
Total assets  $777,772   $682,409 
Liabilities and Equity          
Current liabilities:          
Current portion of long-term debt   24,372    21,498 
Accounts payable - trade   52,609    49,507 
Accrued expenses   81,843    62,609 
Income taxes payable   1,722    3,331 
Dividends payable   6,561    5,293 
Total current liabilities   167,107    142,238 
Long–term debt, less current portion   36,207    53,064 
Deferred tax liability   3,821    3,449 
Equity:          
Inter Parfums, Inc. shareholders’ equity:          
Preferred stock, $0.001 par value. Authorized 1,000,000 shares; none issued        
Common stock, $0.001 par value. Authorized 100,000,000 shares; outstanding, 31,241,548 and 31,138,318 shares at December 31, 2017 and 2016, respectively   31    31 
Additional paid-in capital   66,004    63,103 
Retained earnings   422,570    402,714 
Accumulated other comprehensive loss   (17,832)   (57,982)
Treasury stock, at cost, 9,864,805 common shares at December 31, 2017 and 2016   (37,475)   (37,475)
Total Inter Parfums, Inc. shareholders’ equity   433,298    370,391 
Noncontrolling interest   137,339    113,267 
Total equity   570,637    483,658 
Total liabilities and equity  $777,772   $682,409