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Press release from Business Wire

Inter Parfums, Inc. Reports 2013 Third Quarter Results

<p class='bwalignc'> <span class='bwuline'><b>Raises 2013 and 2014 Guidance</b></span> </p>

Wednesday, November 06, 2013

Inter Parfums, Inc. Reports 2013 Third Quarter Results

16:05 EST Wednesday, November 06, 2013

NEW YORK (Business Wire) -- Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2013.

Third Quarter 2013 Compared to Third Quarter 2012:

  • Net sales of ongoing brands (excluding Burberry brand sales) increased 45.0% to $126.8 million from $87.2 million;
  • Net sales including Burberry brand sales were down 23.8% to $126.8 million, compared to $166.3 million; at comparable foreign currency exchange rates, net sales declined 23.9%;
  • European-based operations generated sales of ongoing brands of $98.1 million, up 41.2% from $69.5 million; including Burberry brand sales, European-based sales were down 34.0%;
  • Sales by U.S.-based operations were $28.7 million, up 62.3% from $17.7 million;
  • Gross margin was 55.2% of net sales compared to 60.8%;
  • S, G & A expense as a percentage of net sales was 43.7% compared to 47.5%;
  • Operating margin was 11.6% of net sales compared to 13.3% of net sales;
  • Net income attributable to Inter Parfums, Inc. was $7.9 million compared to $10.0 million; and,
  • Diluted earnings per share attributable to Inter Parfums, Inc. were $0.25 compared to $0.33.

Regarding European-based operations, Jean Madar, Chairman & CEO of Inter Parfums commented, “Our ongoing brands, especially our three largest, Montblanc, Jimmy Choo and Lanvin, produced another quarter of very strong growth. Montblanc Legend fragrances lead Montblanc to a 57% increase in brand sales, while Flash, a women's fragrance launched early in the year, coupled with ongoing demand for its signature scent, drove sales growth of 56% for Jimmy Choo fragrances. Lanvin sales rose 11% due to the staying power of Eclat d'Arpège, sustained demand of Jeanne Lanvin, and the successful spring launch of Lanvin Me. Adding to the impressive growth of our European business were the recent launches of the Repetto signature scent, as well as Place Vendôme from Boucheron, both of which exceeded our expectations and were meaningful contributors to our performance during the third quarter.”

Discussing U.S.-based operations, Mr. Madar noted, “As we reported last month, Anna Sui sales were boosted by the rollout of La Vie de Bohème this past summer and continuing brand sales which were especially strong in Asia. Sales of Alfred Dunhill legacy fragrances, which commenced in April 2013, as well as initial sales of Agent Provocateur legacy scents beginning in August also contributed to comparable quarter sales growth. In addition, we brought new fragrances for our specialty retail brands to market: Banana Republic's Wildbloom Rouge and Wildblue Noir and bebe Nouveau.”

Mr. Madar continued, “Our new product pipeline for 2014 points to one of our most ambitious launch years ever, with new scents in the works for Oscar de la Renta, Alfred Dunhill, Agent Provocateur, Karl Lagerfeld and Shanghai Tang; all of these new licensed brands were added over the past 13 months. We are also unveiling new fragrances for the Montblanc, Balmain, S.T. Dupont, Banana Republic and Brooks Brothers brands. Add to this our expansion initiatives in Asia, a full year of sales of legacy scents for Oscar de la Renta, Agent Provocateur and Alfred Dunhill, our continued search for additional brands, and our very strong balance sheet, and our future looks promising.”

Russell Greenberg, Executive Vice President & Chief Financial Officer pointed out, “The decline in gross margin was the result of the discontinuance of Burberry product sales in the third quarter. Similarly, the decline in S, G & A expense as a percent of net sales was due to the absence of promotion and advertising costs associated with Burberry product sales, together with lower royalty expense and lower service fees as compared to the prior year third quarter. The $1.1 million favorable change in ‘other income' was the result of a gain on foreign currency as compared to a loss in last year's third quarter, plus a significant increase in interest income in the current period.”

Mr. Greenberg continued, “We generated cash flows from operating activities of $21.5 million for the nine months ended September 30, 2013. This cash flow further enhanced our already strong balance sheet, which had $418 million in working capital, including approximately $288 million in cash, cash equivalents and short-term investments, and no long-term debt as of the end of the third quarter.”

Raises 2013/2014 Guidance

Regarding the Company's financial outlook for 2013, Mr. Greenberg commented, “In September when we last raised guidance to approximately $540 million in net sales, and $1.18 per diluted share in net income attributable to Inter Parfums, Inc., we also noted that during the fourth quarter, we would be making significant investments in advertising and promotion to support the new product launches for Repetto and Boucheron, and the continued worldwide development of the Lanvin, Jimmy Choo and Montblanc brands. With that said, our results year-to-date have been quite a bit better than we had anticipated. As a result, we are raising our 2013 guidance for net sales to approximately $560 million and net income attributable to Inter Parfums, Inc. to approximately $1.23 per diluted share.”

Mr. Greenberg concluded, “We are also updating the preliminary 2014 guidance that we gave in September to reflect our recently signed agreement with Oscar de la Renta, and the greater visibility that we have gained during the last two months. We now expect net sales of approximately $495 million, which represents 15% growth in sales of our ongoing brands. Our revised expectations for net income attributable to Inter Parfums, Inc. are in the range of $0.93 to $0.98 per diluted share. Our previous forecast for 2014 net sales was $475 million resulting in net income attributable to Inter Parfums, Inc. of $0.90 to $0.95 per diluted share.” Guidance for both 2013 and 2014 assumes the dollar remains at current levels.

Dividend

The Company's regular quarterly cash dividend of $0.12 per share will be paid on January 15, 2014 to shareholders of record on December 31, 2013.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Thursday, November 7, 2013. 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. We suggest listeners use Microsoft Explorer as their browser.

In the 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, 2012 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 Nine Months Ended
September 30, September 30,
2013   2012 2013   2012
 
Net sales $ 126,753 $ 166,264 $ 458,048 $ 477,187
 
Cost of sales   56,746     65,146     189,791     181,535  
 
Gross margin 70,007 101,118 268,257 295,652
 
Selling, general and administrative expenses   55,360     79,039     178,735     229,190  
 
Income from operations   14,647     22,079     89,522     66,462  
 
Other expenses (income):
Interest expense 354 391 1,228 1,195
Loss on foreign currency 176 1,405 1,158 2,584
Interest income   (1,218 )   (52 )   (3,472 )   (887 )
 
  (688 )   1,744     (1,086 )   2,892  
 
Income before income taxes 15,335 20,335 90,608 63,570
 
Income taxes   5,432     7,158     33,242     22,658  
 
Net income 9,903 13,177 57,366 40,912
 
Less: Net income attributable to the noncontrolling interest  

2,049

   

3,159

   

14,001

   

9,389

 
 
Net income attributable to

Inter Parfums, Inc.

$

7,854

 

$

10,018

 

$

43,365

 

$

31,523

 
 
 
Earnings per share:
 
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic $ 0.26 $ 0.33 $ 1.41 $ 1.03
Diluted $ 0.25   $ 0.33   $ 1.40   $ 1.03  
 
Weighted average number of shares outstanding:
Basic 30,796 30,570 30,743 30,561
Diluted   30,986     30,717     30,928     30,697  
 
 
Dividends declared per share $ 0.12   $ 0.08   $ 0.36   $ 0.24  
 
 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 
 
ASSETS
  September 30,   December 31,
2013 2012
Current assets:
Cash and cash equivalents $ 137,153 $ 307,335
Short-term investments 150,486 --
Accounts receivable, net 116,465 149,340
Inventories 110,484 142,614
Receivables, other 2,115 2,534
Other current assets 4,495 5,897
Income tax receivable 243 1,968
Deferred tax assets   8,395     13,132  
 
Total current assets 529,836 622,820
 
Equipment and leasehold improvements, net 10,094 12,289
 
Goodwill 973 954
 
Trademarks, licenses and other intangible assets, net 112,477 113,041
 
Other assets   11,475     10,816  
 
Total assets $ 664,855   $ 759,920  
 
LIABILITIES AND EQUITY
Current liabilities:
Loans payable – banks $ 265 $ 27,776
Accounts payable, trade 48,844 73,113
Accrued expenses 51,455 68,768
Income taxes payable 7,598 84,030
Dividends payable   3,695     2,453  
 
Total current liabilities   111,857     256,140  
 
Deferred tax liability   3,505     3,799  
 
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 30,797,014 and 30,680,634 shares at September 30, 2013 and December 31, 2012, respectively

 

31

 

31

Additional paid-in capital 56,365 54,679
Retained earnings 382,087 349,672
Accumulated other comprehensive income 19,347 12,498
Treasury stock, at cost, 9,976,524 common shares at September 30, 2013 and December 31, 2012  

(35,404

)

 

(35,404

)

 
Total Inter Parfums, Inc. shareholders' equity 422,426 381,476
 
Noncontrolling interest   127,067     118,505  
 
Total equity   549,493     499,981  
 
Total liabilities and equity $ 664,855   $ 759,920  

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

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