Inter Parfums, Inc. Reports 2021 Second Quarter Results

Compared to 2019, 25% Increase in Sales Produces 82% Increase in EPS

NEW YORK--()--Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2021. The average dollar/euro exchange rate for the current second quarter was 1.20 compared to 1.10 and 1.12 in the second quarter of 2020 and 2019, respectively.

Second Quarter Highlights:

($ in millions, except per share data)

2021

2020

2019

2021 v 2019

Net Sales

$207.6

 

$49.5

 

$166.2

25%

Gross Margin

64%

 

54%

 

64%

--

Operating Income (loss)

$44.7

 

$(5.5)

 

$22.5

99%

Operating Margin

22%

 

(11)%

 

14%

800 bps

Net Income (loss) attributable to IP

$22.7

 

$(3.1)

 

$12.3

84%

Diluted EPS (loss per share)

$0.71

 

$(0.10)

 

$0.39

82%

In light of the near cessation of business in the second quarter of 2020, the Company is comparing its current midyear results with those of 2019. For the first half of 2021, net sales rose 18% to $406.1 million from $344.5 million in the same period of 2019. At comparable foreign currency exchange rates, net sales rose 16%. Year-to-date net income attributable to Inter Parfums, Inc. rose 61% to $50.3 million compared to 2019’s $31.2 million. For the six months ended June 30, 2021 and 2019, diluted earnings per share were $1.58 and $0.99, respectively, for an increase of 60%. The average U.S. dollar/euro exchange rate was 1.20 and 1.13 for the six months ended June 30, 2021 and 2019, respectively.

Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, “Once again, last year’s outbreak of the COVID-19 pandemic and the business conditions that ensued make comparisons with the very depressed second quarter of 2020 mostly irrelevant. Far more meaningful is a comparison with the second quarter of 2019 and the operating leverage resulting from the nearly 25% increase in net sales in 2021.”

He continued, “Through the first half of 2021, sales in our largest market, North America, rose 59% compared to the same period in 2019, while sales in Western Europe and Asia approximated those of the first half of 2019. Two of our smaller markets, Eastern Europe and Central and South America, experienced sales growth of 54% and 10%, respectively, over the first half of 2019. The only region where sales declined was the Middle East, by 23% to be precise. Similarly, there has been growth of our four largest brands. In the first six months of 2021, Montblanc, Jimmy Choo, Coach, and GUESS brand sales rose 3%, 39% 34% and 58%, respectively, compared to the first half of 2019. In the first half of 2019, the debut of Montblanc Explorer caused a surge in brand sales, which helps explain the modest increase in Montblanc brand sales in the current first half.”

Discussing recent events, Mr. Madar highlighted the signing of a transaction agreement for the exclusive worldwide license for the production and distribution of Ferragamo brand perfumes. Subject to certain conditions, the 10-year license is expected to start in October 2021 and has a 5-year optional term. “We will operate through a wholly-owned Italian company, based in Florence, with both legacy and newly created entrants produced in Italy. Once the business and existing inventory are transferred to us, we will be in a better position to estimate the contribution Ferragamo fragrances will make to 2021 sales. With our flexible business model, strong balance sheet, global distribution network, and committed staff, our pursuit of additional license agreements continues as we focus on established brands whose owners are seeking to reinvigorate their fragrance business. While there can be no assurance that any agreements will be finalized, adding select brands to our portfolio remains a high priority.”

Mr. Madar concluded, “The rollout of products unveiled over the course of the first half continues. These include Montblanc Explorer Ultra Blue, I Want Choo for Jimmy Choo, Coach Sunset Dreams, the Kate Spade signature scent, Rochas Girl, Alibi for Oscar de la Renta, Bella Vita for GUESS, Away by Abercrombie & Fitch, Canyon Escape for Hollister and Driven by Dunhill. Of special note, the MCM genderfluid fragrance that we introduced in first quarter continues to dazzle. With orders nearly triple our initial first year expectations, we have had to refill the pipeline several times to keep pace with sales. Brand extensions dominate our new product pipeline for the remainder of the year, including flankers for Jimmy Choo Urban Hero, the Oscar de la Renta Bella family, the Hollister Wave collection, and the Anna Sui Fantasia pillar. We recently debuted Effect, a full suite of men’s grooming and fragrance products under the GUESS label.”

Russell Greenberg, Executive Vice President and CFO noted, “The slight decline in second quarter gross margin compared to the same period in 2019 is primarily attributable to a weaker dollar and its effect on European operations. In the current second quarter, gross margin for European operations was 67% compared to 68% in the same period in 2019. Gross margin for U.S. operations was 53%, up from 52% in the second quarter of 2019. Once again, sales rose at a faster rate than we had expected, as was the case in the first quarter. As a result, 2021 second quarter promotion and advertising expenditures, included in S, G & A expense, of $33.2 million or 16% of net sales, were well below what we would typically spend in a quarter when sales exceeded $200 million. By way of comparison, in the second quarter of 2019, promotion and advertising expenditures were $36.4 million or 22% of net sales of $166.2 million. For the year as a whole, we continue to expect promotional and advertising expenses to approach historical levels of 21% of net sales.”

Mr. Greenberg also noted, “Our 2021 second quarter and year-to-date bottom lines were negatively impacted by two items. The first is interest expense incurred in connection with the borrowings related to the April 2021 acquisition of the future headquarters of our Paris-based 73% owned subsidiary, Interparfums SA. The second was an unusually high tax rate, which factors in a global tax settlement with the French Tax Authority covering the period January 1, 2010 through December 31, 2020 relating to a wholly-owned subsidiary of Interparfums SA.”

Mr. Greenberg continued, “We closed the second quarter with working capital of $461.7 million, including approximately $298 million in cash, cash equivalents and short-term investments, and a working capital ratio of 3.1 to 1. The $133.2 million of long-term debt relates to the previously mentioned headquarters acquisition, which was financed by a 10-year €120 million (approximately $143 million) bank loan. Approximately €80 million of the variable rate debt was swapped for fixed interest rate debt. Cash provided by operating activities aggregated $38.1 million for the six months ended June 30, 2021.”

Reaffirms Increase in 2021 Guidance

Mr. Greenberg concluded, “The uptick in COVID-19 cases and the highly transmissible Delta variant could change our expectations, but based upon year-to-date results, and current order levels for the second half, we continue to expect 2021 net sales of approximately $750 million, resulting in diluted net income per share of $1.95.” Guidance assumes that the average dollar/euro average exchange rate remains at current levels, there is no significant resurgence of the COVID-19 pandemic and excludes potential Ferragamo fragrance sales following the closing of the pending transaction.

Dividend

The Company’s regular quarterly cash dividend of $0.25 per share will be paid on September 30, 2021 to shareholders of record on September 15, 2021.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, August 10, 2021. 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. 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.

Founded in 1982, Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes and cosmetics as the exclusive worldwide licensee for Abercrombie & Fitch, Anna Sui, Boucheron, Coach, Dunhill, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade, MCM, Moncler, Montblanc, Oscar de la Renta, Paul Smith, Repetto, S.T. Dupont and Van Cleef & Arpels. Inter Parfums is also the owner of Lanvin fragrances and the Rochas brand. Through its global distribution network, the Company’s products are sold in over 120 countries.

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, 2020 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 (LOSS)

(In thousands except per share data)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

Net sales

 

$

207,573

 

 

$

49,506

 

 

$

406,101

 

 

$

194,330

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

75,223

 

 

 

22,662

 

 

 

148,502

 

 

 

78,444

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

132,350

 

 

 

26,844

 

 

 

257,599

 

 

 

115,886

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

87,695

 

 

 

32,367

 

 

 

162,591

 

 

 

103,630

 

 

 

 

 

 

 

 

 

 

Impairment loss

 

 

--

 

 

 

--

 

 

 

2,394

 

 

 

--

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

44,655

 

 

 

(5,523

)

 

 

92,614

 

 

 

12,256

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense

 

 

1,270

 

 

 

361

 

 

 

1,647

 

 

 

1,362

 

(Gain) loss on foreign currency

 

 

309

 

 

 

(13

)

 

 

(1,557

)

 

 

(967

)

Interest income

 

 

(768

)

 

 

(754

)

 

 

(1,155

)

 

 

(1,761

)

Other (income) expense

 

 

93

 

 

 

--

 

 

 

(98

)

 

 

--

 

 

 

 

 

 

 

 

 

 

 

 

 

904

 

 

 

(406

)

 

 

(1,163

)

 

 

(1,366

)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

43,751

 

 

 

(5,117

)

 

 

93,777

 

 

 

13,622

 

 

 

 

 

 

 

 

 

 

Income taxes (benefit)

 

 

14,715

 

 

 

(2,134

)

 

 

28,115

 

 

 

3,306

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

29,036

 

 

 

(2,983

)

 

 

65,662

 

 

 

10,316

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to the noncontrolling interest

 

6,379

 

 

135

 

 

15,343

 

 

3,375

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to

Inter Parfums, Inc.

 

 

$

 

22,657

 

 

 

 

$

 

(3,118

 

)

 

 

$

 

50,319

 

 

 

 

$

 

6,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Inter Parfums, Inc. common shareholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.72

 

 

($

0.10

)

 

$

1.59

 

 

$

0.22

 

Diluted

 

$

0.71

 

 

($

0.10

)

 

$

1.58

 

 

$

0.22

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

31,653

 

 

 

31,532

 

 

 

31,642

 

 

 

31,531

 

Diluted

 

 

31,799

 

 

 

31,532

 

 

 

31,786

 

 

 

31,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.25

 

 

 

--

 

 

$

0.50

 

 

$

0.33

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

June 30,

2021

 

December 31,
2020

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

149,713

 

 

$

169,681

 

Short-term investments

 

 

148,100

 

 

 

126,627

 

Accounts receivable, net

 

 

176,540

 

 

 

124,057

 

Inventories

 

 

163,482

 

 

 

158,822

 

Receivables, other

 

 

19,394

 

 

 

1,815

 

Other current assets

 

 

22,395

 

 

 

16,912

 

Income taxes receivable

 

 

265

 

 

 

2,806

 

 

 

 

 

 

Total current assets

 

 

679,889

 

 

 

600,720

 

 

 

 

 

 

Buildings, equipment and leasehold improvements, net

 

 

135,452

 

 

 

19,580

 

 

 

 

 

 

Right-of-use assets, net

 

 

33,701

 

 

 

24,734

 

Trademarks, licenses and other intangible assets, net

 

 

203,652

 

 

 

214,108

 

Deferred tax assets

 

 

6,187

 

 

 

8,041

 

 

 

 

 

 

Other assets

 

 

49,438

 

 

 

22,962

 

 

 

 

 

 

Total assets

 

$

1,108,319

 

 

$

890,145

 

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

32,246

 

 

$

14,570

 

Current portion of lease liabilities

 

 

6,564

 

 

 

5,133

 

Accounts payable – trade

 

 

59,970

 

 

 

35,576

 

Accrued expenses

 

 

100,911

 

 

 

95,629

 

Income taxes payable

 

 

18,502

 

 

 

5,297

 

 

 

 

 

 

Total current liabilities

 

 

218,193

 

 

 

156,205

 

 

 

 

 

 

Long–term debt, less current portion

 

 

133,244

 

 

 

10,136

 

 

 

 

 

 

Lease liabilities, less current portion

 

 

29,351

 

 

 

21,354

 

 

 

 

 

 

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 31,654,138 and 31,608,588 shares at

June 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

32

 

 

 

Additional paid-in capital

 

 

77,529

 

 

 

75,708

 

Retained earnings

 

 

538,690

 

 

 

503,567

 

Accumulated other comprehensive loss

 

 

(17,457

)

 

 

(5,997

)

Treasury stock, at cost, 9,864,805 shares at June 30, 2021 and December 31, 2020

 

(37,475

)

 

(37,475

)

 

 

 

 

 

Total Inter Parfums, Inc. shareholders’ equity

 

 

561,319

 

 

 

535,835

 

 

 

 

 

 

Noncontrolling interest

 

 

166,212

 

 

 

166,615

 

 

 

 

 

 

Total equity

 

 

727,531

 

 

 

702,450

 

 

 

 

 

 

Total liabilities and equity

 

$

1,108,319

 

 

$

890,145

 

 

Contacts

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

Contacts

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