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Inter Parfums, Inc. Reports 2014 Second Quarter Results

NEW YORK--(BUSINESS WIRE)--Inter Parfums, Inc. (NASDAQ GS:IPAR) today reported results for the second quarter ended June 30, 2014.

“Our financial position remains very strong. We entered the second half with $409 million in working capital, including approximately $275 million in cash, cash equivalents and short-term investments and no long-term debt.”

Second Quarter 2014 Compared to Second Quarter 2013:

  • Net sales of ongoing brands (excluding Burberry brand sales) increased 22.1% to $118.2 million from $96.8 million; at comparable foreign currency exchange rates, net sales of ongoing brands increased 20.0%;
  • Reported net sales of $118.2 million were up 0.6% compared with $117.5 million in the 2013 second quarter when Burberry brand sales were included;
  • European-based operations generated sales of ongoing brands of $94.7 million, up 31.2% from $72.1 million;
  • Sales by U.S.-based operations were $23.5 million, compared to $24.7 million;
  • Gross margin was 57.6% of net sales, up from 54.1%;
  • S, G & A expense as a percentage of net sales was 46.8% compared to 47.4%;
  • Operating margin was 10.9% of net sales compared to 6.7% of net sales;
  • Net income attributable to Inter Parfums, Inc. was $6.1 million compared to $3.8 million; and,
  • Basic and diluted earnings per share were $0.20 compared to $0.12.

Jean Madar, Chairman & CEO of Inter Parfums commented, “With respect to European-based operations, new product launches and the continuing success of several established scents produced the 31.2% increase in second quarter sales of ongoing brands. Montblanc fits both categories as brand sales were up 88% due to the spring launch of Emblem coupled with the strong performance of the brand’s Legend fragrances. One of the highlights of 2014 was the debut of the Karl Lagerfeld fragrance duo which contributed approximately $4 million in incremental sales for the quarter. In addition, sales of existing collections by S.T. Dupont and Paul Smith, the Repetto signature scent, and Lanvin’s Eclat d’Arpège exceeded those of last year’s second quarter. Together these gains more than offset the 6% comparable quarter decline in Jimmy Choo brand sales; as previously noted, in last year’s second quarter, Jimmy Choo brand sales rose more than 40% driven by the launch of Flash. Later this fall, Jimmy Choo Man is unveiling, and with better than expected pre-orders, we anticipate that this new scent will be a catalyst for growth in brand sales.”

Mr. Madar continued, “The slight decline in U.S.-based sales was in great part attributable to the challenging comparison with last year’s second quarter when we commenced sales of Dunhill legacy fragrances. We expect brand momentum to build as Icon, our all new Dunhill scent, makes a selective debut late this year and rolls out more broadly in 2015. International distribution of Fatale and Fatale Pink for Agent Provocateur has been proceeding and we look forward to U.S. distribution later in the fall. While Anna Sui has been our leading brand in Asian markets, especially China, we will have another important name in that market when we introduce our inaugural fragrance collection for Shanghai Tang in China later this year, which is to be followed by a select international roll-out in 2015. While legacy Oscar de la Renta scents are included in 2014 sales, we believe our new women’s scent, which is scheduled to debut in 2015, will be an important catalyst for the brand.”

Discussing first half sales by region, Mr. Madar also noted, “We are very pleased that growth occurred across nearly all geographic markets. Consolidated sales of ongoing brands in Western Europe and North America, our two largest markets, were up 28% and 19%, respectively. While Asian sales have been flat through the first half, sales in Central/South America are running nearly 52% ahead of 2013, and in the Middle East, they were up 30%. Although Eastern Europe represents a small portion of our business, conditions in Russia made that region the only down market through the first half of 2014.”

Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc. stated, “As expected, gross margin in the second quarter of 2014 increased to 57.6% of sales. The increase was primarily attributable to the impact of the sale of our remaining Burberry inventory, at cost, during the second quarter of 2013. Additionally, selling, general and administrative expenses in the second quarter of 2014 were relatively unchanged as a percentage of sales from that in the 2013 period.”

Mr. Greenberg continued, “Our financial position remains very strong. We entered the second half with $409 million in working capital, including approximately $275 million in cash, cash equivalents and short-term investments and no long-term debt.”

2014 Guidance

Mr. Greenberg reaffirmed 2014 guidance stating, “We continue to expect net sales to come in at approximately $495 million, or 15% ahead of 2013 net sales of ongoing brands. Net income attributable to Inter Parfums, Inc. should be in the range of $0.93 to $0.95 per diluted share. Guidance assumes the dollar remains at current levels.”

Dividend

The Company’s regular quarterly cash dividend of $0.12 per share will be paid on October 15, 2014 to shareholders of record on September 30, 2014.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, August 12, 2014. 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. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. 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.

In the more than 30 years since its founding, Inter Parfums, Inc. has been selected as the fragrance and beauty partner for a growing list of brands that include Lanvin, Montblanc, Jimmy Choo, Boucheron, Van Cleef & Arpels, Karl Lagerfeld, Paul Smith, S.T. Dupont, Balmain, Repetto, Agent Provocateur, Alfred Dunhill, Anna Sui, Shanghai Tang, Oscar de la Renta, Gap, Banana Republic, Brooks Brothers, bebe, and Betsey Johnson. Inter Parfums is known for innovation, quality and its ability to capture the genetic code of each brand in the products it develops, manufactures and distributes in over 100 countries worldwide.

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, 2013 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.

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP financial information in public disclosures. The Company believes that our presentation of the non-GAAP financial information included in this release constitutes important supplemental measures of operating performance, because it provides readers with more complete disclosure and facilitates a more accurate comparison of current results to historic results.

 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

(Unaudited)

 
         

Three Months Ended

June 30,

     

Six Months Ended

June 30,

2014       2013 2014       2013
 
Net sales $ 118,192 $ 117,485 $ 239,923 $ 331,296
 
Cost of sales   50,076     53,878     102,577     133,045  
 
Gross margin 68,116 63,607 137,346 198,251
 
Selling, general and administrative expenses   55,265     55,708     107,073     123,376  
 
Income from operations   12,851     7,899     30,273     74,875  
 
Other expenses (income):
Interest expense 574 416 847 874
(Gain) loss on foreign currency 122 (461 ) 72 982
Interest income   (948 )   (1,064 )   (2,059 )   (2,254 )
 
  (252 )   (1,109 )   (1,140 )   (398 )
 
Income before income taxes 13,103 9,008 31,413 75,273
 
Income taxes   5,436     4,487     11,596     27,810  
 
Net income 7,667 4,521 19,817 47,463
 
Less: Net income attributable to the noncontrolling interest  

1,558

   

706

   

4,814

   

11,952

 
 

Net income attributable to

        Inter Parfums, Inc.

$

6,109

 

$

3,815

 

$

15,003

 

$

35,511

 
 
 
Earnings per share:
 
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic $ 0.20 $ 0.12 $ 0.49 $ 1.16
Diluted $ 0.20   $ 0.12   $ 0.48   $ 1.14  
 
Weighted average number of shares outstanding:
Basic 30,938 30,748 30,919 30,717
Diluted   31,069     30,953     31,063     30,900  
 
 
Dividends declared per share $ 0.12   $ 0.12   $ 0.24   $ 0.24  
 
 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 
ASSETS
          June 30,

2014

     

December 31,

2013

Current assets:
Cash and cash equivalents $ 60,151 $ 125,650
Short-term investments 214,637 181,677
Accounts receivable, net 96,118 79,932
Inventories 125,530 117,347
Receivables, other 1,718 2,418
Other current assets 6,180 4,775
Income tax receivable 870 6,435
Deferred tax assets   5,274     7,257  
Total current assets 510,478 525,491
Equipment and leasehold improvements, net 9,753 10,444
Trademarks, licenses and other intangible assets, net 112,562 116,243
Other assets   12,341     11,880  
Total assets $ 645,134   $ 664,058  
 
LIABILITIES AND EQUITY
Current liabilities:
Loans payable – banks $ 265 $ 6,104
Accounts payable, trade 58,329 56,736
Accrued expenses 37,046 58,333
Income taxes payable 2,580 1,270
Dividends payable   3,713     3,704  
Total current liabilities   101,933     126,147  
Deferred tax liability   2,584     2,555  
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 30,938,648 and 30,863,421 shares at

       June 30, 2014 and December 31, 2013, respectively

 

31

 

31

Additional paid-in capital 58,907 57,877
Retained earnings 367,093 359,459
Accumulated other comprehensive income 22,740 25,860

Treasury stock, at cost, 9,924,500 and 9,940,977 common shares at

       June 30, 2014 and December 31, 2013 respectively

 

(36,266

)

 

(36,016

)

Total Inter Parfums, Inc. shareholders’ equity 412,505 407,211
Noncontrolling interest   128,112     128,145  
Total equity   540,617     535,356  
Total liabilities and equity $ 645,134   $ 664,058  
 

Contacts

Inter Parfums, Inc.
Russell Greenberg, 212-983-2640
Exec. VP & CFO
rgreenberg@interparfumsinc.com
www.interparfumsinc.com
or
Investor Relations Counsel
The Equity Group Inc.
Fred Buonocore, 212-836-9607
fbuonocore@equityny.com
or
Linda Latman, 212-836-9609
llatman@equityny.com
www.theequitygroup.com