Net Income Increased
53%; Affirms 2023 Guidance
Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported record
results for the first quarter ended March 31, 2023.
First Quarter 2023 Highlights:
($ in millions, except per share data)
2023
2022
% Change
Net Sales
$311.7
$250.7
24%
Gross Margin
65.1%
63.3%
180 bps
Operating Income
$90.3
$61.2
47%
Operating Margin
29.0%
24.4%
460 bps
Net Income (attributable to IP)
$54.1
$35.3
53%
Diluted EPS
$1.68
$1.10
52%
The average dollar/euro exchange rates for
the 2023 and 2022 first quarters were 1.07 and 1.12, respectively,
leading to a negative 2.4% foreign exchange impact in the current
first quarter sales. At comparable foreign currency exchange rates,
consolidated first quarter net sales increased 27% from the first
quarter of 2022.
Jean Madar, Chairman & Chief Executive Officer of Inter
Parfums, Inc. noted, “As we reported last month, our 2023 first
quarter was the best ever sales quarter in our history as our
European based operations grew the top line by 26% or 29% in
constant currency and U.S. based operations by 19%. With respect to
European operations, Jimmy Choo brand sales grew 63% and inched out
those of Montblanc, historically our largest brand, with the
uninterrupted success of the I Want Choo line launched in 2021, I
Want Choo Forever and Rose Passion, plus new flankers rolled out at
the end of 2022 and early 2023. Montblanc and Coach brand sales
rose 28% and 24%, respectively and we achieved double digit sales
gains on several of our mid-sized brands including Karl Lagerfeld,
Boucheron and Rochas.”
Moving on to U.S. based operations, Mr. Madar continued, “The
19% increase in comparable quarter sales builds upon the 77%
increase in sales achieved in last year’s first quarter. As we
reported last month, incremental Donna Karan and DKNY sales, plus
double-digit growth for Ferragamo and Oscar de la Renta, following
successful brand extensions accounted for much of the increase as
did brand extensions within established lines for Abercrombie &
Fitch and MCM. As previously reported, GUESS sales were unduly
hampered by our ERP implementation in the first few months of this
year. Add to that, 2022 first quarter GUESS brand sales rose 36%,
making for a difficult comparison. However, we have large orders of
GUESS goods shipping in the second quarter, as well as the second
half, which should make for more compelling comparisons for the
year.
“The sales gains achieved in the first quarter encompassed all
regions. Our three largest markets, North America, Western Europe
and Asia/Pacific grew sales by 36%, 21% and 8%, respectively. Our
sales in Central and South America, Eastern Europe, and the Middle
East were also robust, up 43%, 25%, and 5%, respectively.
Additionally, our travel retail business has picked up in line with
the resumption of international travel. We have also begun to see
light at the end of the tunnel with respect to the progressive
reopening of China and look forward to meaningful sales growth as
the year unfolds.”
Michel Atwood, Chief Financial Officer of Inter Parfums, Inc.
noted, “Gross margin for European operations rose to 67.8% from
66.8% in last year’s first quarter, due to a combination of pricing
and a strong U.S. dollar. For United States operations, 2023 first
quarter gross profit margin rose to 57.6% from 53.9% in the first
quarter of 2022 driven by pricing and limited cost inflation on
goods sold driven by first-in, first out (FIFO) accounting. We are
also seeing favorable brand and channel mix, as a higher portion of
our sales are being sold directly to retailers as opposed to
third-party distributors.
“By leveraging scale at our European based operations, our first
quarter SG&A expenses only rose 12% from the same period in
2022 and represented 33.6% of net sales, down from 37.9% of net
sales in last year’s first quarter. For U.S. based operations,
SG&A expenses increased 25% and represented 43.5% of net sales
compared to 41.5% in last year’s first quarter. As has been the
case since last year, increased promotion and advertising expenses
were responsible for the higher SG&A expenses across our
Company. Additionally, and in-line with previous quarters, our U.S.
based operations is annualizing the impact of enlarging its staff
and infrastructure throughout 2022 in multiple locations to
maximize the potential of newer brands.”
Mr. Atwood continued, “Our first quarter operating margin of 29%
was very strong due to lower spending. While our big spend on
promotion and advertising is generally concentrated in the fourth
quarter to encourage year-end sell-through and first quarter
reorders, our better-than-expected first quarter sales resulted in
advertising and promotion expenses of only 11.3% of net sales, down
from 13.6% one year earlier as we continue to be surprised by
stronger than expected market growth. By way of comparison, in the
first quarters of 2019 and 2018, promotion and advertising expenses
were 15.4% and 15.6% of net sales, respectively. On a full-year
basis, we continue to target 21% of annual net sales for promotion
and advertising expense.
“Below the operating line, other income was favorable overall by
$2.3 million as compared to flat in the prior year period,
contributing $0.04 to earnings per share. There were several items
worth noting. As a result of swings in currency rates, we went from
recognizing a gain of $2.2 million on foreign currency in the prior
year’s first quarter to a loss of $0.8 million in the current first
quarter. On the other hand, interest and investment income, net of
interest expense, added over $3 million to other income in the
current period as compared to a loss of $2.4 million in the prior
year period. On a consolidated basis, our effective income tax rate
was 23%, down from 24% in last year’s first quarter.
“We closed the first quarter with working capital of $489
million, including approximately $238 million in cash and cash
equivalents and short-term investments, bringing our working
capital ratio to 2.4 to 1. Our long-term debt totaled $145 million
at March 31, 2023, primarily due to the Interparfums SA
headquarters acquisition, which was financed by a 10-year, $130.5
million loan, at an effective fixed rate of approximately
1.1%.”
Affirms 2023 Guidance: Mr. Atwood concluded, “The year
started on a very strong note, and we saw a continuation of the
trend in April. Affirming our raised guidance, as announced last
month in our first quarter sales release, we believe we remain well
on track to achieve net sales of $1.25 billion and earnings per
diluted share of $4.25.
“The impact of China on our sales is only marginally included in
our guidance. We will be in a better position to revisit this
subject as that business scales up and we have better visibility.
Our current 2023 guidance assumes that the average dollar/euro
average exchange rate remains at current levels and there is no
significant resurgence of the COVID-19 pandemic.”
Abercrombie & Fitch Distribution Agreement for Fierce
Collection Announced: Inter Parfums also announced that
Abercrombie & Fitch has granted it the right to distribute its
number one men’s fragrance, Fierce, in selective markets. The first
phase of the agreement, which becomes effective on September 1,
2023, covers Fierce distribution in certain major markets. The
second phase which activates in February 2024, covers distribution
in additional regions, and may include other flankers of the Fierce
family of products.
Commenting Mr. Madar noted, “Our relationship with Abercrombie
& Fitch began in 2014, when we signed our initial license
agreement. In the ensuing years, we have brought to market several
major blockbuster pillars, including First Instinct, Away and
Authentic. With close to a decade under our belt, we have earned
Abercrombie & Fitch’s confidence, as evidenced by this
agreement, entrusting us to distribute the iconic Fierce collection
on a test basis for three years. Our plans call for growing
penetration in existing Fierce markets that includes department,
specialty and duty-free stores, as well as online sales, while
exploring opportunities in untapped markets.”
Dividend: The Company’s regular quarterly cash dividend
of $0.625 per share will be paid on June 30, 2023 to shareholders
of record on June 15, 2023.
Share Buyback Program: In the first quarter of 2023, the
Company initiated a small share repurchase program to purchase
166,060 shares. The number of shares to be repurchased may be
increased in the future. Over the course of the first quarter of
2023, the Company repurchased 43,060 shares at a cost of $5.58
million. These shares are classified as treasury shares on the
accompanying balance sheet. The Company plans to continue
repurchasing shares throughout 2023.
Conference Call: Management will host a conference call
to discuss financial results and business developments beginning at
11:00 am ET on Tuesday, May 9, 2023. Interested parties may
participate in the live call by dialing (877) 423-9820 (toll-free)
or (201) 493-6749 (international). Participants are asked to
dial-in 10 minutes before the conference call is scheduled to
begin.
A live audio webcast will also be available in the “Events” tab
within the Investor Relations section of the Company’s website at
www.interparfumsinc.com, or by clicking here. The conference call
will be available for webcast replay for approximately 90 days
following the live event.
About Inter Parfums, Inc.: Operating in the global
fragrance business since 1982, Inter Parfums, Inc. produces and
distributes a wide array of prestige fragrance and
fragrance-related products under license agreements with brand
owners. The Company manages its business in two operating segments,
European based operations, through its 72% owned subsidiary,
Interparfums SA, and United States based operations.
The portfolio of prestige brands includes Abercrombie &
Fitch, Anna Sui, Boucheron, Coach, Donna Karan, DKNY, Ferragamo,
Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade,
MCM, Moncler, Montblanc, Oscar de la Renta, Ungaro, and Van Cleef
& Arpels, whose products are distributed in over 120 countries
around the world through an extensive and diverse network of
distributors. Inter Parfums, Inc. is also the registered owner of
several trademarks including Lanvin and Rochas.
Forward-Looking Statements: 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, 2022 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
(In thousands except per share
data)
(Unaudited)
Three Months Ended March 31,
2023
2022
Net sales
$
311,723
$
250,678
Cost of sales
108,766
92,020
Gross margin
202,957
158,658
Selling, general and administrative
expenses
112,678
97,441
Income from operations
90,279
61,217
Other expenses (income):
Interest expense
2,357
883
Loss (gain) on foreign currency
759
(2,239
)
Interest and investment (income) loss
(5,382
)
1,466
Other income
(41
)
(116
)
(2,307
)
(6
)
Income before income taxes
92,586
61,223
Income taxes
21,678
14,932
Net income
70,908
46,291
Less: Net income attributable to the
noncontrolling interest
16,840
10,992
Net income attributable to Inter
Parfums, Inc.
$
54,068
$
35,299
Earnings per share:
Net income attributable to Inter
Parfums, Inc. common shareholders:
Basic
$
1.69
$
1.11
Diluted
$
1.68
$
1.10
Weighted average number of shares
outstanding:
Basic
32,018
31,840
Diluted
32,159
32,010
Dividends declared per share
$
0.625
$
0.50
CONSOLIDATED BALANCE
SHEETS
(In thousands except share and
per share data)
(Unaudited)
ASSETS
March 31,
2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
149,055
$
104,713
Short-term investments
88,702
150,833
Accounts receivable, net
241,948
197,584
Inventories
323,700
289,984
Receivables, other
27,779
28,803
Other current assets
20,346
15,650
Income taxes receivable
71
157
Total current assets
851,601
787,724
Property, equipment and leasehold
improvements, net
169,036
166,722
Right-of-use assets, net
26,901
27,964
Trademarks, licenses and other
intangible assets, net
294,300
290,853
Deferred tax assets
12,543
11,159
Other assets
25,825
24,120
Total assets
$
1,380,206
$
1,308,542
LIABILITIES AND EQUITY
Current liabilities:
Loans payable - banks
$
18,000
$
--
Current portion of long-term debt
29,092
28,547
Current portion of lease liabilities
5,310
5,296
Accounts payable – trade
93,053
88,388
Accrued expenses
190,305
213,621
Income taxes payable
26,409
8,715
Total current liabilities
362,169
344,567
Long–term debt, less current
portion
145,128
151,494
Lease liabilities, less current
portion
23,302
24,335
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 32,012,950 and 31,967,300 shares
at
March 31, 2023 and December 31, 2022,
respectively
32
32
Additional paid-in capital
95,429
90,186
Retained earnings
654,440
620,095
Accumulated other comprehensive loss
(48,440
)
(56,056
)
Treasury stock, at cost, 9,907,865 and
9,864,805 shares at
March 31, 2023 and December 31, 2022,
respectively
(43,055
)
(37,475
)
Total Inter Parfums, Inc. shareholders’
equity
658,406
616,782
Noncontrolling interest
191,201
171,364
Total equity
849,607
788,146
Total liabilities and equity
$
1,380,206
$
1,308,542
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230508005612/en/
Inter Parfums, Inc. Michel Atwood Chief Financial Officer (212)
983-2640 www.interparfumsinc.com
or
The Equity Group Inc. Investor Relations Counsel Karin Daly
(212) 836-9623 / kdaly@equityny.com Linda Latman (212) 836-9609 /
llatman@equityny.com www.theequitygroup.com
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