Inter Parfums, Inc. Reports 2018 Second Quarter Results
NEW YORK--(BUSINESS WIRE)--Aug 7, 2018--Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the second quarter ended June 30, 2018. Of note, the average dollar/euro ratio for the current second quarter is 1.19, up 8% from 1.10 in the second quarter of 2017.
Second Quarter 2018 Compared to Second Quarter 2017:Net sales were $149.4 million, up 15.7% from $129.1 million, at comparable foreign currency exchange rates, net sales increased 12.3%; Net sales by European based operations rose 8.3% to $115.6 million from $106.7 million; Net sales by U.S. based operations increased 50.8% to $33.8 million, compared to $22.4 million; Gross margin was 64.0% compared to 65.0%; S,G&A expenses as a percentage of net sales were 51.5% compared to 53.8% Operating income increased 29.7% to $18.8 million from $14.5 million; Operating margin rose to 12.6% compared to 11.2%; The effective income tax rate was 30.2% compared to 33.4%; Net income attributable to Inter Parfums, Inc. increased 61.6% to $10.9 million from $6.7 million and; Net income attributable to Inter Parfums, Inc. per diluted share rose 59.1% to $0.35 from $0.22.
Discussing European based operations, Jean Madar, Chairman & CEO of Inter Parfums, Inc., stated, “As we reported last month, second quarter sales growth was primarily attributable to recurring sales of established fragrances and brand extensions by three of our largest brands, Jimmy Choo, Coach and Lanvin, for which comparable quarter sales rose 8.2%, 98.5% and 7.1%, respectively. One such brand extension that took place this spring was the debut of Coach Floral, which helped elevate Coach into third place among our largest fragrance brands through the first half of 2018. We also launched Jimmy ChooMan Blue this spring, further building upon the Jimmy Choo Man franchise. We entered the second half with Montblanc brand sales running 12% ahead of the first half of 2017. The 33% first quarter increase in Montblanc brand sales offset the 9.8% second quarter sales decline. We are encouraged by the comparable quarter upturn in Karl Lagerfeld brand sales, due in great part to Les Parfums Matières, a duo launched in the second half of 2017 . ”
Moving on to U.S. operations, Mr. Madar noted, “Anna Sui fragrance sales performed extremely well during the second quarter due to the brand’s popularity in the fast-growing Asian market. Dunhill is still a star performer thanks to the Icon fragrance family, and the recent launch of Dunhill Century. Oscar de la Renta legacy scents and Bella Blanca, which debuted in the first quarter, supported growth in brand sales. We are also very pleased by the successful launch of two brand extensions for the Abercrombie & Fitch First Instinct fragrance family. Lastly, the inclusion of legacy GUESS fragrance sales toward the end of the second quarter factored into the nearly 51% increase in net sales.”
Highlighting new product launches scheduled for the second half, Mr. Madar noted, “For European operations, Jimmy Choo Fever debuted in France in July and will be on U.S. shelves beginning in September. Also last month, we unveiled Éclat de Nuit for Lanvin. In addition, we will be introducing two men’s scents, Coach Platinum in September and Rochas Moustache the following month. For U.S. operations, we are debuting Flight of Fancy Spirit for Anna Sui and rolling out Century, a new pillar by Dunhill. Also this summer, Abercrombie & Fitch adds First Instinct Blue for women to its fragrance portfolio and for Hollister, an entirely new fragrance duo, Festival Vibes, comes to market.”
Mr. Madar concluded, “We are very encouraged by the year-to-date sales growth across all regions. Through the first half of the year, our three largest markets, North America, Western Europe and Asia, achieved sales growth of 17.8%, 9.0% and 31.5%, respectively, compared to the first half of 2017. Similarly, our next three markets ranked by size, the Middle East, Central and South America and Eastern Europe, have grown sales by 22.5%, 13.0% and 24.1%, respectively.”
Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “The second quarter dollar/euro ratio had less of an impact on our sales and gross margin than in the first quarter, when the U.S. dollar/euro exchange rate increased 16% to 1.23, as compared to 1.06 in the first quarter of 2017. The gross margin generated by European operations in the second quarter of 2018 declined slightly to 68.1% from 68.5% in the prior year’s second quarter, while gross margin for U.S. operations was 50.2%, up from 48.5% in the corresponding period last year due to increased sales of higher margin prestige products under licenses.”
He continued, “In the current second quarter, two significant swing items below the operating income line magnified the strong operating results. Firstly, there was a $1.5 million gain on foreign currency versus the $0.8 million loss on foreign currency in the second quarter of 2017. Secondly, our effective tax rate was 30% in the current second quarter versus 33% in the same period last year.”
Mr. Greenberg also pointed out, “We closed the quarter with working capital of $372 million, including approximately $223 million in cash, cash equivalents and short-term investments, a working capital ratio of nearly 3.2 to 1 and $58 million of long-term debt including current maturities incurred in connection with the 2015 Rochas brand acquisition.”
Affirms 2018 Guidance
Mr. Greenberg concluded, “As we reported last month, we continue to look for 2018 net sales to approximate $665 million and net income per diluted share attributable to Inter Parfums, Inc. to come in at $1.59. Guidance assumes the dollar remains at current levels.”
The Company’s regular quarterly cash dividend of $0.21 per share will be paid on October 15, 2018 to shareholders of record on September 28, 2018.
Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Wednesday, August 8, 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. 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 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, bebe, 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.
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CONTACT: Inter Parfums, Inc.
Russell Greenberg, 212-983-2640
Exec. VP & CFO
The Equity Group Inc.
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