IPAR Interparfums Inc

Affirms FY2023 Net Sales Guidance; Increases FY2023 Net Earnings Guidance

Inter Parfums, Inc. (NASDAQ GS: IPAR) (“Inter Parfums” or the “Company”) today reported its financial results for the three months and nine months ended September 30, 2023.

Third Quarter Financial Highlights

($ in millions, except per share data)

2023

2022

% Change

Net Sales

$368

$280

31%

Gross Profit

$235

$182

29%

Gross Margin (as a percentage of net sales)

63.9%

64.9%

(100 bps)

Operating Income

$87

$64

35%

Operating Margin

23.7%

23.0%

70 bps

Net Income (attributable to Inter Parfums, Inc.)

$53

$41

28%

Earnings Per Diluted Share

$1.66

$1.30

28%

 

At comparable foreign currency exchange rates, consolidated net sales for the three months and nine months ended September 30, 2023, increased 27% and 26%, respectively, compared to the same periods last year. Of note, the average dollar/euro exchange rate for the current third quarter was 1.09 compared to 1.01 in the third quarter of 2022, while for the first nine months of 2023, the average dollar/euro exchange rate was 1.08 compared to 1.06 in the same period in 2022, leading to a positive 4% and 1% foreign exchange impact for the quarter and first nine months, respectively.

Operational Commentary

“We continued to see favorable trends across the robust fragrance industry, high demand for our brands, and success in our launches, extensions, and distribution, all of which combined to produce record quarterly net sales and very strong earnings,” said Jean Madar, Chairman & Chief Executive Officer of Inter Parfums.

“North America continued to be our largest market, with sales increasing 29% in the third quarter compared to the prior year period, and Western Europe followed at 24% sales growth. Asia, our third largest market, performed well with net sales increasing 20% over that same period. We have been able to increase our sell-out in China, namely on Coach, Montblanc and Ferragamo, enabling us to manage down our stock-in-trade levels, which should provide a favorable tailwind in 2024.

“With regard to Roberto Cavalli and Lacoste, we expect to benefit from these recent license acquisitions beginning in 2024. Roberto Cavalli fragrance products are scheduled to start shipping in January 2024, with extensions planned for mid-summer next year. The Lacoste license will take effect in January 2024, and we are well prepared to launch our corresponding strategy and product innovation.”

Mr. Madar concluded, “As in prior years, we are making a major investment in advertising and promotion during the fourth quarter to ensure sell-out at the retail level, build brand awareness and drive continued growth. Once again, we target 21% of our annual net sales for advertising and promotion as we invest aggressively in the fourth quarter to drive sell-through. The first three quarters of 2023 have been incredibly successful, and we look forward to executing on our plans for the remainder of the year.”

Financial Commentary

Michel Atwood, Chief Financial Officer of Inter Parfums, noted, “Net income attributable to Inter Parfums, Inc. increased 28% to $53 million, or $1.66 per diluted share, in the third quarter of 2023, compared to $41 million, or $1.30 per diluted share, in the prior year period.

“Overall, in the third quarter we were able to maintain our operating margins as our pricing actions have broadly compensated for inflationary impacts.

“SG&A as a percentage of sales was down 170 basis points to 40.2% as the significant increase in third quarter sales allowed us to better absorb fixed expenses as compared to the prior year period despite increased investments in Advertising and Promotion, and the structural investments we made to support our new licenses.”

2023 Guidance

With an update on 2023 guidance, Mr. Atwood continued, “The ongoing strength in the market, coupled with our year-to-date performance, gives us confidence in the balance of the year. We are affirming our FY2023 net sales guidance of $1.3 billion, or growth of 20% from FY2022, despite geopolitical tensions and the very high fourth quarter 2022 base.

“We are now increasing our earnings per diluted share guidance to $4.75 (previously guided to $4.55), or growth of 26% from $3.78 for FY 2022.”

Guidance for 2023 assumes that the dollar/euro average exchange rate remains at current levels; only modest sales from China are included, and newly acquired fragrance licenses, Roberto Cavalli and Lacoste, are not included.

Dividend

The Company’s regular quarterly cash dividend of $0.625 per share will be paid on December 31, 2023, to shareholders of record on December 15, 2023.

Share Buyback Program

In December 2022, our Board of Directors authorized a share repurchase program of up to 166,060 shares. Over the course of the first nine months of 2023, the Company repurchased 85,060 shares at a cost of $11.3 million. The Company plans to continue repurchasing shares during the balance of 2023.

Third Quarter 2023 Conference Call

Management will host a conference call to discuss financial results and business developments beginning at 11:00 am ET on Wednesday, November 8, 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, Roberto Cavalli, 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 BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS

 

 

September 30, 2023

 

December 31, 2022

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

79,764

 

 

$

104,713

 

Short-term investments

 

 

103,745

 

 

 

150,833

 

Accounts receivable, net

 

 

288,085

 

 

 

197,584

 

Inventories

 

 

364,270

 

 

 

289,984

 

Receivables, other

 

 

13,645

 

 

 

28,803

 

Other current assets

 

 

26,847

 

 

 

15,650

 

Income taxes receivable

 

 

498

 

 

 

157

 

Total current assets

 

 

876,854

 

 

 

787,724

 

Property, equipment and leasehold improvements, net

 

 

163,002

 

 

 

166,722

 

Right-of-use assets, net

 

 

29,359

 

 

 

27,964

 

Trademarks, licenses and other intangible assets, net

 

 

286,697

 

 

 

290,853

 

Deferred tax assets

 

 

16,063

 

 

 

11,159

 

Other assets

 

 

22,422

 

 

 

24,120

 

Total assets

 

$

1,394,397

 

 

$

1,308,542

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

 

Loans payable - banks

 

$

4,501

 

 

$

--

 

Current portion of long-term debt

 

 

41,768

 

 

 

28,547

 

Current portion of lease liabilities

 

 

5,687

 

 

 

5,296

 

Accounts payable – trade

 

 

87,161

 

 

 

88,388

 

Accrued expenses

 

 

200,065

 

 

 

213,621

 

Income taxes payable

 

 

23,913

 

 

 

8,715

 

Total current liabilities

 

 

363,095

 

 

 

344,567

 

Long–term debt, less current portion

 

 

128,983

 

 

 

151,494

 

Lease liabilities, less current portion

 

 

25,452

 

 

 

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 31,980,805 and 31,967,300 shares at September 30, 2023 and December 31, 2022, respectively

 

 

32

 

 

 

 

32

 

 

Additional paid-in capital

 

 

95,752

 

 

 

90,186

 

Retained earnings

 

 

703,091

 

 

 

620,095

 

Accumulated other comprehensive loss

 

 

(59,802

)

 

 

(56,056

)

Treasury stock, at cost, 9,949,865 and 9,864,805 shares at September 30, 2023 and December 31, 2022, respectively

 

(48,764

)

 

(37,475

)

Total Inter Parfums, Inc. shareholders’ equity

 

 

690,309

 

 

 

616,782

 

Noncontrolling interest

 

 

186,558

 

 

 

171,364

 

Total equity

 

 

876,867

 

 

 

788,146

 

Total liabilities and equity

 

$

1,394,397

 

 

$

1,308,542

 

 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

Net sales

 

$

367,969

 

 

$

280,462

 

 

$

988,936

 

 

$

775,865

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

132,962

 

 

 

98,562

 

 

 

362,568

 

 

 

281,525

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

235,007

 

 

 

181,900

 

 

 

626,368

 

 

 

494,340

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

147,805

 

 

 

117,424

 

 

 

393,866

 

 

 

323,249

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

87,202

 

 

 

64,476

 

 

 

232,502

 

 

 

171,091

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense

 

 

2,397

 

 

 

682

 

 

 

7,030

 

 

 

2,589

 

(Gain) loss on foreign currency

 

 

(669

)

 

 

273

 

 

 

(656

)

 

 

(2,245

)

Interest and investment income

 

 

(1,062

)

 

 

(3,343

)

 

 

(8,421

)

 

 

(2,341

)

Other (income) expense

 

 

(77

)

 

 

346

 

 

 

(125

)

 

 

(98

)

 

 

 

 

 

 

 

 

 

 

 

 

589

 

 

 

(2,042

)

 

 

(2,172

)

 

 

(2,095

)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

86,613

 

 

 

66,518

 

 

 

234,674

 

 

 

173,186

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

20,493

 

 

 

13,221

 

 

 

55,128

 

 

 

39,078

 

 

 

 

 

 

 

 

 

 

Net income

 

 

66,120

 

 

 

53,297

 

 

 

179,546

 

 

 

134,108

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to the noncontrolling interest

 

12,906

 

 

11,874

 

 

37,312

 

 

29,769

 

 

 

 

 

 

 

 

 

Net income attributable to Inter Parfums, Inc.

$

53,214

 

$

41,423

 

$

142,234

 

$

104,339

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Inter Parfums, Inc. common shareholders:

 

 

 

 

 

 

 

 

Basic

 

$1.66

 

 

$1.30

 

 

$4.44

 

 

$3.28

 

Diluted

 

$1.66

 

 

$1.30

 

 

$4.42

 

 

$3.26

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

31,976

 

 

 

31,860

 

 

 

32,000

 

 

 

31,848

 

Diluted

 

 

32,124

 

 

 

31,968

 

 

 

32,149

 

 

 

31,977

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$0.625

 

 

$0.50

 

 

$1.875

 

 

$1.50

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231107465923/en/

Inter Parfums, Inc. Michel Atwood Chief Financial Officer (212) 983-2640 www.interparfumsinc.com

or

The Equity Group Inc. nvestor Relations Counsel Karin Daly (212) 836-9623 / kdaly@equityny.com Linda Latman (212) 836-9609 / llatman@equityny.com www.theequitygroup.com