Inter Parfums, Inc. (NASDAQ GS:IPAR) today reported results for the second quarter ended June 30, 2015.

Second Quarter 2015 Compared to Second Quarter 2014:
  • Net sales were $102.0 million compared to $118.2 million; at comparable foreign currency exchange rates, net sales decreased 5.2%;
  • European-based operations generated net sales of $77.1 million compared to $94.7 million;
  • Sales by U.S.-based operations rose 5.7% to $24.9 million from $23.5 million;
  • Gross margin was 59.1% of net sales compared to 57.6%;
  • S,G&A expense as a percentage of net sales was 51.1% compared to 46.8%;
  • Operating income was $8.2 million compared to $12.9 million;
  • Net income attributable to Inter Parfums, Inc. was $4.4 million or $0.14 per diluted share compared to $6.1 million or $0.20 per diluted share.

Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, "As was the case in the first quarter, second quarter sales for European-based operations were lower than those of the 2014 second quarter due to three primary factors: currency fluctuations, difficult comparisons and weakness in certain markets. The greatest headwind came from the 19% depreciation of the euro versus the dollar, which served to mask sales growth for some brands, and exacerbate declines for others. Additionally, some brands had challenging comparisons against very strong new product launches in the second quarter of 2014. For example, our largest brand, Montblanc, experienced a 23% decline in local currency and a 38% reduction in dollars due largely to the high bar set by the launch of Emblem in the second quarter of last year. Lastly, the economic environments in some of our markets, particularly Eastern Europe and China, have weakened in 2015. For instance, brand sales for Lanvin, another one of our largest names, were down 9% and 27% in local currency and dollars, respectively, largely due to weak demand in Eastern Europe, where the brand is especially popular. Partially offsetting these declines, Jimmy Choo once again delivered very positive results. Continued excitement over the Jimmy Choo Man line, particularly in the U.S., along with the women's fragrance, Jimmy Choo Blossom, which launched earlier this year, combined to generate sales growth of 62% in local currency and 30% in dollars for the brand.

"Our U.S.-based operations delivered solid growth in the second quarter," continued Mr. Madar. "The 6% increase in sales during the period reflects the successful launches of Extraordinary by Oscar de la Renta and Icon by Dunhill earlier this year. Mitigating some of these gains was the decline in Anna Sui brand sales, due to continued negative market conditions in China. Anna Sui product sales were down 24% in the second quarter of 2015 as compared to the prior year second quarter.

"Looking ahead through this year and next, we remain optimistic about our prospects. One reason for our optimism relates to the launch of several new fragrances, including this month's debut of Jimmy Choo Illicit. For Montblanc, our plans call for the unveiling of Lady Emblem during the second half of 2015, which should boost brand sales as the year progresses and into 2016. Lanvin sales should also benefit from new launch activity in the coming months, with the introduction of a new scent for women, Éclat de Fleurs. For our U.S. brands, this October we will be launching Romantica, a new women's scent from Anna Sui. In addition, we are continuing the global roll out of new products introduced under the Oscar de la Renta and Dunhill labels earlier this year.

Mr. Madar concluded, "With respect to growth drivers for 2016, in early June of this year, we closed on our acquisition of the Rochas brand, and have begun work on developing new fragrances and marketing programs to capitalize on the potential of this brand. We are doing the same with Abercrombie & Fitch, Hollister and Coach, and expect them to spur growth for Inter Parfums in the coming year and beyond."

Discussing factors impacting profitability, Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc. stated, "Gross profit margin for our European operations was 62.9%, up 320 basis points from the second quarter of 2014 as a result of the strength of the U.S. dollar against the euro. A strong dollar has a positive impact on the profitability of our European operations as nearly 50% of our European operation's sales are denominated in dollars, while most of our costs are incurred in euro. During the second quarter of 2015, the average dollar/euro exchange rate was 1.11, a 19% strengthening of the dollar as compared to 1.37 in the second quarter of 2014. Gross margin for our U.S. operations, although down 210 basis points in the second quarter of 2015 compared to the prior year, improved 280 basis points for the six months ended June 30, 2015, compared to the prior year period, driven by a favorable mix shift towards newer fragrances from our prestige brands such as Oscar de la Renta and Dunhill. The increase in selling, general and administrative expenses as a percentage of net sales reflects reduced absorption of fixed costs in our European operations due to the lower sales level during the quarter. In our U.S. operations, selling, general and administrative expenses as a percentage of sales was flat with the prior year quarter, as royalty and advertising expenses rose proportionately to the sales increase, primarily related to more recently signed prestige product licenses, Oscar de la Renta and Dunhill."

Mr. Greenberg pointed out, "We closed the quarter with working capital of $342 million, including approximately $229 million in cash, cash equivalents and short-term investments, and $89.7 million of long-term debt, relating to the term loan we entered into to finance the Rochas acquisition."

2015 Guidance

Mr. Greenberg concluded by saying, "We currently expect 2015 net sales to come in at a range of $460 to $470 million, resulting in net income per share attributable to Inter Parfums in the range of $0.95 to $1.00 per diluted share. Our current guidance takes into account continued negative market conditions prevailing in China and Eastern Europe. Our guidance also assumes the dollar remains at current levels."

Dividend

The Company's regular quarterly cash dividend of $0.13 per share will be paid on October 15, 2015 to shareholders of record on September 30, 2015.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Monday, August 10, 2015. 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 more than 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 Abercrombie & Fitch, Agent Provocateur, Anna Sui, Balmain, Banana Republic, bebe, Boucheron, Coach, Dunhill, Gap, Hollister, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Oscar de la Renta, Paul Smith, Repetto, Rochas, Shanghai Tang, S.T. Dupont and Van Cleef & Arpels. 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, 2014 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 EndedJune 30, Six Months EndedJune 30,
  2015       2014     2015       2014  
 
Net sales $ 102,021 $ 118,192 $ 211,270 $ 239,923
 
Cost of sales   41,696     50,076     83,335     102,577  
 
Gross margin 60,325 68,116 127,935 137,346
 
Selling, general and administrative expenses   52,083     55,265     98,627     107,073  
 
Income from operations   8,242     12,851     29,308     30,273  
 
Other expenses (income):
Interest expense 613 574 771 847
Loss on foreign currency 80 122 2,086 72
Interest income   (776 )   (948 )   (1,972 )   (2,059 )
 
  (83 )   (252 )   885     (1,140 )
 
Income before income taxes 8,325 13,103 28,423 31,413
 
Income taxes   2,805     5,436     9,598     11,596  
 
Net income 5,520 7,667 18,825 19,817
 
Less: Net income attributable to the noncontrolling interest  

1,169
   

1,558
   

4,467
   

4,814
 
 
Net income attributable to

Inter Parfums, Inc.

$

4,351
 

$

6,109
 

$

14,358
 

$

15,003
 
 
 
Earnings per share:
 
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic $ 0.14 $ 0.20 $ 0.46 $ 0.49
Diluted $ 0.14   $ 0.20   $ 0.46   $ 0.48  
 
Weighted average number of shares outstanding:
Basic 30,988 30,938 30,984 30,919
Diluted   31,107     31,069     31,089     31,063  
 
 
Dividends declared per share $ 0.13   $ 0.12   $ 0.26   $ 0.24  
 
 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)
 
ASSETS
 

June 30,2015
 

December 31,2014
Current assets:
Cash and cash equivalents $ 76,931 $ 90,138
Short-term investments 151,901 190,152
Accounts receivable, net 89,486 90,124
Inventories 122,352 102,326
Receivables, other 1,959 1,542
Other current assets 5,780 4,504
Income tax receivable 866 929
Deferred tax assets   7,180     6,848  
 
Total current assets 456,455 486,563
 
Equipment and leasehold improvements, net 8,618 9,187
 
Trademarks, licenses and other intangible assets, net 208,637 98,531
 
Other assets   9,319     10,225  
 
Total assets $ 683,029   $ 604,506  
 
LIABILITIES AND EQUITY
Current liabilities:
Loans payable - banks $ -- $ 298
Current portion of long-term debt 21,910 --
Accounts payable - trade 53,302 46,646
Accrued expenses 33,120 49,194
Income taxes payable 2,011 3,773
Dividends payable   4,030     3,717  
 
Total current liabilities   114,373     103,628  
 
Long-term debt, less current portion   89,727     --  
Deferred tax liability   4,394     2,154  
 
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 31,003,908 and 30,977,293 shares at June 30, 2015 and December 31, 2014, respectively

 

 

31

 

31
Additional paid-in capital 61,015 60,200
Retained earnings 380,421 374,121
Accumulated other comprehensive (loss) (39,459 ) (15,823 )

Treasury stock, at cost, 9,897,995 common shares at June 30, 2015 and December 31, 2014, respectively
 

(36,464

)
 

(36,464

)
 
Total Inter Parfums, Inc. shareholders' equity 365,544 382,065
 
Noncontrolling interest   108,991     116,659  
 
Total equity   474,535     498,724  
 
Total liabilities and equity $ 683,029   $ 604,506  

View source version on businesswire.com: http://www.businesswire.com/news/home/20150807005718/en/

Copyright Business Wire 2010