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8-K - 8-K - INTER PARFUMS INCs113793_8k.htm

 

Exhibit 99.1

 

(Graphic)

 

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.”

 

 

 

 

Inter Parfums, Inc. News Release Page 2

November 5, 2018

 

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.

 

 

 

 

Inter Parfums, Inc. News Release Page 3

November 5, 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

 

 

 

 

Inter Parfums, Inc. News Release Page 4

November 5, 2018

 

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 

 

 

 

 

Inter Parfums, Inc. News Release Page 5

November 5, 2018

 

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