NEW YORK--(BUSINESS WIRE)--Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the fourth quarter and year ended December 31, 2018.
Fourth Quarter 2018 Compared to Fourth Quarter 2017:
- Net sales were $177.2 million, up 18.5% from $149.5 million; at comparable foreign currency exchange rates, net sales increased 21.2%;
- Net sales by European based operations rose 16.8% to $134.8 million from $115.4 million;
- Net sales by U.S. based operations were $42.4 million, up 24.4% compared to $34.1 million;
- Gross margin was 66.1% for both periods;
- S,G&A expenses as a percentage of net sales were 60.1% compared to 61.4%;
- Operating income was $10.6 million as compared to $4.8 million;
- Net income attributable to Inter Parfums, Inc. increased 82.9% to $8.0 million compared to $4.4 million; and,
- Net income attributable to Inter Parfums, Inc. per diluted share rose 85.7% to $0.26 from $0.14.
Thus for the year as a whole, net sales increased 14.3% to $675.6 million, as compared to $591.3 million, in 2017. At comparable foreign currency exchange rates, net sales increased 12.8%. Net income attributable to Inter Parfums, Inc. increased 29.3% to $53.8 million from 2017’s $41.6 million; and net income attributable to Inter Parfums, Inc. per diluted share rose 28.6% to $1.71 from $1.33 per diluted share in 2017.
Jean Madar, Chairman & CEO of Inter Parfums stated, “In every region in which we operate, we achieved sales growth in 2018. In our three largest markets, North America, Western Europe and Asia, sales rose 19%, 9% and 24%, respectively. Our business in the Middle East has also been quite robust with a year-over-year sales increase of 17%, and even in Eastern Europe and Central and South America, 2018 sales were ahead 7% and 1%, respectively, compared to 2017. Regarding our four largest European based brands, Montblanc remains in first place. Despite no major 2018 launches, Montblanc brand sales were up a modest 1.4%. Jimmy Choo brand sales rose 8.4% in 2018 after a fourth quarter surge in connection with the rollout of the brand extension, Jimmy Choo Fever. With the release of five new scents over the past three years, Coach now claims third place among our brands, with 2018 sales just short of $100 million, and 73% ahead of 2017. Lanvin, our fourth largest brand, achieved annual sales growth of 7% with the ubiquitous and growing Éclat d’Arpège line leading the way.”
Moving on to U.S. based operations, Mr. Madar noted, “The addition of GUESS legacy scents beginning in April has been a major contributor to the increase in 2018 sales, along with gains by Anna Sui and Abercrombie & Fitch for which brand extensions rather than major launches were undertaken last year.”
Highlighting several key operating factors impacting profitability, Russell Greenberg, Executive Vice President and CFO stated, “Our consolidated gross margin was 63.3% and 63.6% in 2018 and 2017, respectively. Gross margin for European operations was 66.3% in 2018 and 67.1% in 2017; the average dollar/euro exchange rate was 1.18 in 2018, as compared to 1.13 in 2017 with the weaker dollar accounting for the small fluctuation. For U.S. operations, gross margin was 51.4% and 49.3% in 2018 and 2017, respectively with the improvement primarily resulting from increased sales of higher margin prestige products under licenses.”
He continued, “Selling, general and administrative expenses rose 13% compared to 2017, and as a percentage of net sales, were 49% and 50% for 2018 and 2017, respectively. Once again, promotion and advertising included selling, general and administrative expenses peaked in the fourth quarter, which brought the total for the full year to 20.3% of net sales, down slightly from 20.9% in 2017.”
Discussing non-operating items, Mr. Greenberg pointed out that in 2017, there was a $1.5 million loss on foreign currency while in 2018, the loss was $250,000 and the Company’s effective income tax rate was 27.3% in 2018 and 29.2% in 2017.
Mr. Greenberg also noted, “In 2018, cash provided by operating activities aggregated $63.0 million and we closed the year with working capital of $382 million, including approximately $261 million in cash, cash equivalents and short-term investments, a working capital ratio of over 3 to 1 and $46.1 million of long-term debt, including current maturities.”
Mr. Madar continued, “In addition to brand extensions and flankers, we have several major launches in the works for 2019. We recently unveiled Montblanc Explorer for men and have been rolling out our first men’s scent for Rochas called Moustache. Others in the pipeline include a fragrance duo for Abercrombie & Fitch called Authentic, a signature scent for Dunhill, a new men’s pillar for the Jimmy Choo family of fragrances, and for Lanvin, A Girl in Capri. For our newest brands, Graff will launch a women’s multi-scent collection late in the year and we will debut our first scents sold exclusively via e-commerce for the Lily Aldridge brand beginning in the fall.”
Increases 2019 Guidance
Mr. Greenberg concluded, “Based upon favorable business conditions that have been unfolding this year, we are raising our 2019 guidance. We are raising our net sales guidance from $705 million to $712 million resulting in net income attributable to Inter Parfums, Inc. per diluted share of $1.85, from our prior estimate of $1.81. Guidance for 2019 assumes the dollar remains at current levels.”
The Company’s regular quarterly cash dividend of $0.275 per share is payable on April 15, 2019 to shareholders of record on March 29, 2019.
Management will conduct a conference call to discuss financial results and business developments at 1:00 PM ET, today, Monday, March 4, 2019. 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, 2018 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||Twelve Months Ended|
|December 31,||December 31,|
|Cost of sales||60,095||50,725||248,012||214,965|
|Selling, general and administrative expenses||106,545||91,864||332,831||295,540|
Income from operations
|Other expenses (income):|
|Loss on foreign currency||436||241||251||1,549|
|Income before income taxes||9,762||4,270||95,859||78,065|
|Less: Net income attributable to the noncontrolling interest||
Net income attributable to Inter Parfums, Inc.
|Net income attributable to Inter Parfums, Inc. common shareholders:|
|Weighted average number of shares outstanding:|
|Dividends declared per share||$||0.28||$||0.21||$||0. 91||$||
|INTER PARFUMS, INC. AND SUBSIDIARIES|
|Consolidated Balance Sheets|
|December 31, 2018 and 2017|
|(In thousands except share and per share data)|
|Cash and cash equivalents||$||193,136||$||208,343|
|Accounts receivable, net||136,420||120,749|
|Other current assets||8,076||7,356|
|Income taxes receivable||810||3,468|
|Total current assets||569,402||549,278|
|Equipment and leasehold improvements, net||9,839||10,330|
|Trademarks, licenses and other intangible assets, net||204,325||200,495|
|Deferred tax assets||9,299||9,658|
|Liabilities and Equity|
|Current portion of long-term debt||23,155||24,372|
|Accounts payable - trade||58,328||52,609|
|Income taxes payable||4,396||1,722|
|Total current liabilities||186,977||167,107|
|Long–term debt, less current portion||22,906||36,207|
|Deferred tax liability||3,538||3,821|
|Inter Parfums, Inc. shareholders’ equity:|
|Preferred stock, $0.001 par value. Authorized 1,000,000 shares;|
|Common stock, $0.001 par value. Authorized 100,000,000 shares;|
|outstanding, 31,382,127 and 31,241,548 shares|
|at December 31, 2018 and 2017, respectively||31||31|
|Additional paid-in capital||69,970||66,004|
|Accumulated other comprehensive loss||(33,650||)||(17,832||)|
|Treasury stock, at cost, 9,864,805 common shares|
|at December 31, 2018 and 2017||(37,475||)||(37,475||)|
|Total Inter Parfums, Inc. shareholders’ equity||447,607||433,298|
|Total liabilities and equity||$||799,167||$||777,772|