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 Hollisters 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.
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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 mens scents debuting and there will be new womens fragrances for Coach and Lanvin. For U.S. operations, 2019 launches are for the most part brand extensions including one for Anna Suis Fantasia, an addition to the GUESS 1981 fragrance family, a sister scent for Oscar de la Rentas 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 years 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 years 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 years 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.
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.
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.
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.
See Accompanying Tables
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Cost of sales||68,066||66,059||187,917||164,240|
|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):|
|(Gain) loss on foreign currency||1,109||335||(185||)||1,308|
|Income before income taxes||34,193||32,948||86,097||73,795|
|Less: Net income attributable to the noncontrolling interest|
| Net income attributable to|
Inter Parfums, Inc.
|Earnings per share:|
|Net income attributable to Inter Parfums, Inc. common shareholders:|
|Weighted average number of shares outstanding:|
|Dividends declared per share||$||0.21||$||0.17||$||0.63||$||0.51|
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
| September 30,|
|December 31, 2017|
|Cash and cash equivalents||$||133,553||$||208,343|
|Accounts receivable, net||164,574||120,749|
|Other current assets||5,678||7,356|
|Income taxes receivable||1,107||3,468|
|Total current assets||545,690||549,278|
|Equipment and leasehold improvements, net||9,854||10,330|
|Trademarks, licenses and other intangible assets, net||207,828||200,495|
|Deferred tax assets||10,941||9,658|
|LIABILITIES AND EQUITY|
|Current portion of long-term debt||$||23,418||$||24,372|
|Accounts payable “ trade||47,452||52,609|
|Income taxes payable||11,660||1,722|
|Total current liabilities||162,373||167,107|
|Long“term debt, less current portion||28,626||36,207|
|Deferred tax liability||3,552||3,821|
|Inter Parfums, Inc. shareholders equity:|
|Preferred stock, $.001 par; authorized 1,000,000 shares; none issued|
| Common stock, $.001 par; authorized 100,000,000 shares; outstanding 31,333,842 and 31,241,548 shares at|
September 30, 2018 and December 31, 2017, respectively
|Additional paid-in capital||68,665||66,004|
|Accumulated other comprehensive loss||(30,423||)||(17,832||)|
|Treasury stock, at cost, 9,864,805 shares at September 30, 2018 and December 31, 2017|
|Total Inter Parfums, Inc. shareholders equity||449,883||433,298|
|Total liabilities and equity||$||783,153||$||777,772|
Inter Parfums, Inc.
Russell Greenberg, Exec. VP & CFO, (212)
The Equity Group Inc.
Fred Buonocore, (212)
Latman, (212) 836-9609