Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2011.

Third Quarter 2011 Compared to Third Quarter 2010:
  • Net sales increased 42.1% to $171.7 million from $120.9 million; at comparable foreign currency exchange rates, net sales rose 36%;
  • European-based operations generated sales of $154.7 million, up 41.7% from $109.2 million;
  • Sales by U.S.-based operations were $17.0 million, up 45.9% from $11.7 million;
  • Gross margin was 63% compared to 59%;
  • S, G & A expense as a percentage of sales was 51% compared to 45%;
  • Operating margins were 12.6% of net sales compared to 13.7% of net sales;
  • Net income attributable to Inter Parfums, Inc. rose 24.5% to $10.4 million from $8.4 million; and,
  • Basic and diluted earnings per share increased 21.4% to $0.34 from $0.28.

Through the first nine months of 2011, net sales were $426.1 million or 22.4% ahead of $348.0 million in the same period of 2010. At comparable foreign currency exchange rates, net sales rose approximately 18%. Net income attributable to Inter Parfums, Inc. increased 38.5% to $28.2 million or $0.92 per basic and diluted share from $20.4 million or $0.67 per basic and diluted share.

Jean Madar, Chairman & CEO of Inter Parfums, noted, “Spurred by the global launch of Burberry Body, Burberry fragrance sales were up 29% in local currency for the quarter. Our European-based operations also benefited from the continued strong momentum of the Jimmy Choo and Montblanc fragrance launches and the commencement in January 2011 of European-based product distribution in the U.S. by Interparfums Luxury Brands, a subsidiary of Inter Parfums, S.A. With respect to U.S.-based operations, the comparable quarter sales increase was driven by a strong performance in international distribution of our specialty retail products. Of special note, Banana Republic, Gap and bebe product lines are performing especially well in overseas markets. Also during the third quarter, we launched Too Too by Betsey Johnson and bebe Gold.”

Discussing factors impacting third quarter profitability, Russell Greenberg, Executive Vice President & Chief Financial Officer pointed out, “The gross margin improvement was primarily due to booking wholesale rather than ex-factory sales by Interparfums Luxury Brands, which was offset slightly by a weaker dollar compared to last year. Product mix and promotional sales accounted for the remaining fluctuations in gross margin. The significant increase in S, G & A expense in both dollars and as a percentage of sales was, as we had forecast, due to increased advertising and promotional expenditures overall, but especially in connection with the global launch of Burberry Body. In addition, as was the case in the first half of the year, we are responsible for 100% of the cost of advertising support for prestige fragrance brands distributed in the U.S.; last year such expenses were shared with our former U.S. distributor. Our effective income tax rate was 40.5% in the current third quarter versus 32.5% for the corresponding period of 2010 reflecting an agreement in principle with the French Tax Authority on the consequences of a tax audit, which covered both income and non-income tax items. As a result, as of September 30, 2011, we increased income tax expense by $1.7 million and reduced a reserve for contingency related to non-income tax items recorded in 2010 by $1.3 million.”

Mr. Greenberg noted, “The accounts receivable balance at September 30, 2011 is up 42% from the June 30, 2011 balance, which corresponds to the 42% sequential quarterly increase in net sales. We closed the third quarter with inventories of $182.3 million or about $6.0 million more than at the start of the quarter and $72.0 million more than at the start of the year, which reflects the needed inventory build to support anticipated sales growth and new licensing activities in both European operations and U.S. operations.”

Affirms 2011 Guidance & Announces Planned Release Date for 2012 Guidance

Mr. Greenberg concluded, “As we recently reported, we now expect 2011 sales to approximate $570.0 million resulting in net income attributable to Inter Parfums, Inc. of approximately $32.5 million or $1.05 per diluted share. Guidance assumes the dollar remains at current levels. We also plan to announce our initial guidance for 2012 on November 16, 2011.”

Dividend

The Company’s regular quarterly cash dividend of $0.08 per share will be payable on January 13, 2012 to shareholders of record on December 30, 2011.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Thursday, November 10, 2011. Interested parties may participate in the call by dialing 201 493-6744; 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.

Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes and cosmetics as the exclusive worldwide licensee for Burberry, Van Cleef & Arpels, Jimmy Choo, Paul Smith, Montblanc, S.T. Dupont and Boucheron. Inter Parfums, Inc. also owns Lanvin Perfumes and Nickel, a men's skin care company. It also produces personal care products for specialty retailers under exclusive agreements for Gap, Banana Republic, Brooks Brothers, bebe, Betsey Johnson, Nine West and Lane Bryant brands. In addition, Inter Parfums produces and supplies mass market fragrances and fragrance related products. Inter Parfums, Inc.'s products are sold in over 120 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, 2010 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.

   

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

(Unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2011   2010 2011   2010
 
Net sales $ 171,706 $ 120,853 $ 426,132 $ 347,991
 
Cost of sales   63,123     49,578     155,973     140,271  
 
Gross margin 108,583 71,275 270,159 207,720
 
Selling, general and administrative expenses   87,038     54,692     212,226     163,630  
 
Income from operations   21,545     16,583     57,933     44,090  
 
Other expenses (income):
Interest expense 687 529 1,517 1,627
(Gain) loss on foreign currency (1,239 ) (461 ) (1,091 ) 2,435
Interest income   (241 )   (382 )   (947 )   (977 )
 
  (793 )   (314 )   (521 )   3,085  
 
Income before income taxes 22,338 16,897 58,454 41,005
 
Income taxes   9,054     5,488     21,402     13,663  
 
Net income 13,284 11,409 37,052 27,342
 
Less: Net income attributable to the noncontrolling interest  

2,851
   

2,961
   

8,867
   

6,988
 
 

Net income attributable to Inter Parfums, Inc.

$

10,433
 

$

8,448
 

$

28,185
 

$

20,354
 
 
 
Earnings per share:
 
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic $ 0.34 $ 0.28 $ 0.92 $ 0.67
Diluted $ 0.34   $ 0.28   $ 0.92   $ 0.67  
 
Weighted average number of shares outstanding:
Basic 30,539 30,443 30,506 30,332
Diluted   30,698     30,564     30,676     30,441  
 
 
Dividends declared per share $ 0.08   $ 0.065   $ 0.24   $ 0.195  
 

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)
 
ASSETS
  September 30,   December 31,
2011 2010
Current assets:
Cash and cash equivalents $ 23,185 $ 37,548
Short-term investments 6,752 49,391
Accounts receivable, net 167,630 97,593
Inventories 182,300 109,840
Receivables, other 2,300 3,688
Other current assets 2,036 4,635
Deferred tax assets   7,421     7,230  
 
Total current assets 391,624 309,925
 
Equipment and leasehold improvements, net 14,485 11,207
 
Goodwill 3,691 3,654
 
Trademarks, licenses and other intangible assets, net 110,760 111,402
 
Other assets   1,505     1,917  
 
Total assets $ 522,065   $ 438,105  
 
LIABILITIES AND EQUITY
Current liabilities:
Loans payable – banks $ 20,377 $ 5,250
Current portion of long-term debt 7,578 11,090
Accounts payable - trade 94,112 52,694
Accrued expenses 54,932 47,413
Income taxes payable 3,658 7,905
Dividends payable   2,443     1,979  
 
Total current liabilities   183,100     126,331  
 
Long-term debt, less current portion   -     5,039  
 
Deferred tax liability   6,315     6,789  
 
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 30,539,381 and 30,445,881 shares at September 30, 2011 and December 31, 2010, respectively

 

31

 

30
Additional paid-in capital 50,566 48,887
Retained earnings 226,450 205,453
Accumulated other comprehensive income 16,742 14,757
Treasury stock, at cost, 10,009,492 common shares at September 30, 2011 and December 31, 2010  

(34,151

)
 

(34,151

)
 
Total Inter Parfums, Inc. shareholders’ equity 259,638 234,976
 
Noncontrolling interest   73,012     64,970  
 
Total equity   332,650     299,946  
 
Total liabilities and equity $ 522,065   $ 438,105  
 

Copyright Business Wire 2010

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