IPAR Interparfums Inc

Delivers 2023 Target EPS, Announces 20% Increase in Cash Dividend, and Affirms 2024 Guidance

Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter & Full Year Highlights:

($ in millions, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2023

2022

% Change

2023

2022

% Change

Net Sales

$329

$311

6%

$1,318

$1,087

21%

Gross Margin

64.7%

64.4%

+30 bps

63.7%

63.9%

(20 bps)

Operating Income

$19

$23

(19%)

$251

$194

29%

Operating Margin

5.7%

7.5%

(170 bps)

19.1%

17.9%

+120 bps

Net Income attributable to IP

$10

$17

(37%)

$153

$121

26%

Diluted EPS

$0.32

$0.52

(37%)

$4.75

$3.78

26%

At comparable foreign currency exchange rates, consolidated net sales for the three months and year ended December 31, 2023, increased 4% and 20%, respectively, compared to the same periods in 2022. Of note, the average dollar/euro exchange rate for the 2023 fourth quarter was 1.08 compared to 1.02 in the fourth quarter of 2022, while for the full year, the average dollar/euro exchange rate for 2023 was 1.08 compared to 1.05 in 2022, leading to a positive 2% foreign exchange impact for net sales for the fourth quarter and 1% for the full year.

Operational Commentary

Jean Madar, Chairman & Chief Executive Officer of Inter Parfums noted, “Ongoing demand for our brands, strong holiday season sell-through, and a dynamic fragrance market resulted in a strong 2023 fourth quarter and record full year net sales and earnings results.

“Of special note, for the first time ever, each of our three largest brands generated sales in excess of $200 million. In 2023, Jimmy Choo emerged as our largest brand, growing sales by 19%, and Montblanc and Coach sales rose by 15% and 25%, respectively.

“Our fourth largest brand, GUESS, grew sales by a robust 23%. With a strategically planned pipeline of innovation, the brand is well on its way to also exceed $200 million in sales in the coming years. Lastly, with growth of 21% for 2023, the fragrance sales performance of Ferragamo has remained strong and continues to present significant growth opportunity.”

He continued, “Especially gratifying, all of our markets experienced excellent growth last year. North America, Europe, and Asia, our three largest markets, achieved sales gains of 22%, 21% and 17%, respectively. Our sales in the Middle East rose by 22% and Central and South America by 33%.

“Travel retail and China sales did not have a meaningful effect on our sales, as they constitute a small portion of our business. We continue to believe the Chinese market and travel retail offer great promise and stand ready to make strategic investments to grow our business in China when the market opportunity aligns with market visibility.”

Mr. Madar continued, “The new year is on track for continued growth as our aggressive advertising and promotion spend in the fourth quarter drove sell-through for our retail partners, enabling 2024 first half restocking orders. Initial shipments of Lacoste fragrances began in January, and Roberto Cavalli fragrances started shipping in February. Since signing both license agreements, we have curated their collections and revitalized their best sellers. We are also developing impactful omnichannel advertising and promotional campaigns to welcome back brand loyalists and attract influential fragrance enthusiasts to the newest members of our fragrance portfolio.

“Following initial success with Phase 1 of our Abercrombie & Fitch Fierce roll-out in certain major markets, including Europe, Mexico, and Australia, in the final quarter of 2023, we have commenced with Phase 2 this year, further expanding into Western Europe and Latin America, and may include other flankers of the Fierce family of products.

“We recently introduced the highly concentrated, four scent luxury Cashmere Collection for Donna Karan and, across our brand portfolio, we have a vibrant pipeline of new product launches in the works unveiling throughout 2024 including a new blockbuster fragrance debuting for Lacoste,” Mr. Madar concluded.

Financial Commentary

Michel Atwood, Chief Financial Officer of Inter Parfums pointed out, “We achieved our 2023 bottom line goal of $4.75 per diluted share despite a $3.1 million tax assessment as the result of a tax audit undergone by our majority owned French subsidiary, Interparfums SA, for the 2020 and 2021 tax years. Excluding this one-time impact, we would have delivered $4.82 per diluted share for the full year, largely beating our guidance.”

Mr. Atwood continued, “Consolidated gross margin as a percentage of net sales for 2023 and 2022 was nearly identical, with higher selling prices and channel/product mix offsetting the inflation headwinds and segment mix.

“SG&A as a percentage of net sales declined to 44.6% from 45.3% in 2022, largely driven by sales growth during 2023, which allowed for better absorption of fixed operating costs and favorable segment mix. While we spent $107 million in the fourth quarter, a 23% increase compared to same period in 2022, we finished the year below our advertising and promotion target of 21% of net sales, coming in at 19.7% due in part to better than expected sales.

“These factors led to $251 million in operating income, a 29% increase compared to 2022, and an operating profit margin of 19%, a 120 basis-point improvement from 2022,” Mr. Atwood pointed out.

“Finally, our financial position remains strong. We closed the year with $183 million in cash, cash equivalents and short term investments, and working capital of $514 million resulting in a working capital ratio of 2.6 to 1.”

Reaffirms 2024 Guidance

Mr. Atwood concluded, “We are a global Company operating in over 120 countries, and while the fragrance industry remains strong, and retailers finished the year with healthy inventories, the political climate both in the Middle East and throughout Eastern Europe leads us to keep our guidance unchanged due to lack of visibility. As the year unfolds and we attain greater clarity, we will revisit our guidance. At this time, we are reaffirming our 2024 guidance, which calls for net sales of $1.45 billion, resulting in earnings per diluted share of $5.15. This represents a 10% increase in net sales and an 8% increase in earnings per diluted share.

“As we previously reported and included in our guidance, the Lacoste non-cash amortization expense of the acquisition cost is expected to reduce our 2024 earnings per diluted share by approximately $0.11.”

Guidance assumes that the average dollar/euro exchange rate remains at current levels.

Announces 20% Increase in Cash Dividend

Mr. Atwood also announced, “Our Board of Directors approved a 20% increase in the annual dividend to $3.00 per share. The decisive factors motivating our board's decision include our robust financial standing, promising growth opportunities, and commitment to delivering value to our shareholders.”

The next quarterly cash dividend of $0.75 per share is payable on March 29, 2024 to shareholders of record on March 15, 2024.

Share Buyback Program

In December 2022, our Board of Directors authorized a share repurchase program for our outstanding common stock. During 2023, the Company repurchased 116,860 shares at a cost of $15.4 million. These shares are classified as treasury shares on the accompanying consolidated balance sheet. In February 2024, our Board of Directors authorized the Company to continue repurchasing up to 130,000 shares throughout 2024.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 am ET on Wednesday, February 28, 2024.

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 approximately 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, through wholly owned subsidiaries in the United States and Italy.

The portfolio of prestige brands includes Abercrombie & Fitch, Anna Sui, Boucheron, Coach, Donna Karan/DKNY, Emanuel Ungaro, Ferragamo, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, MCM, Moncler, Montblanc, Oscar de la Renta, Roberto Cavalli, 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, 2023 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

INTER PARFUMS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2023, and 2022

(In thousands except share and per share data)

 

Assets

 

2023

 

2022

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

88,462

 

$

104,713

 

Short-term investments

 

94,304

 

 

150,833

 

Accounts receivable, net

 

247,240

 

 

197,584

 

Inventories

 

371,859

 

 

289,984

 

Receivables, other

 

 

7,012

 

 

28,803

 

Other current assets

 

29,458

 

 

15,650

 

Income taxes receivable

 

691

 

 

157

 

Total current assets

 

839,026

 

 

787,724

 

Property, equipment and leasehold improvements, net

 

169,222

 

 

166,722

 

Right-of-use assets, net

 

28,613

 

 

27,964

 

Trademarks, licenses and other intangible assets, net

 

296,356

 

 

290,853

 

Deferred tax assets

 

 

14,545

 

 

11,159

 

Other assets

 

 

21,567

 

 

24,120

 

Total assets

$

1,369,329

 

$

1,308,542

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

 

Loans payable - banks

$

4,420

 

$

--

 

Current portion of long-term debt

 

29,587

 

 

28,547

 

Current portion of lease liabilities

 

5,951

 

 

5,296

 

Accounts payable - trade

 

97,409

 

 

88,388

 

Accrued expenses

 

178,880

 

 

213,621

 

Income taxes payable

 

8,498

 

 

8,715

 

Total current liabilities

 

324,745

 

 

344,567

 

Long–term debt, less current portion

 

127,897

 

 

151,494

 

Lease liabilities, less current portion

 

24,517

 

 

24,335

 

Equity:

 

 

 

 

Inter Parfums, Inc. shareholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value. Authorized 1,000,000 shares:

 

 

 

 

none issued

 

--

 

 

--

 

Common stock, $0.001 par value. Authorized 100,000,000 shares:

 

 

 

 

outstanding, 32,004,660 and 31,967,300 shares

 

 

 

 

on December 31, 2023, and 2022, respectively

 

32

 

 

32

 

Additional paid-in capital

 

98,565

 

 

90,186

 

Retained earnings

 

693,848

 

 

620,095

 

Accumulated other comprehensive loss

 

(40,188

)

 

(56,056

)

Treasury stock, at cost, 9,981,665 and 9,864,805 common shares

 

 

 

 

on December 31, 2023, and 2022, respectively

 

(52,864

)

 

(37,475

)

Total Inter Parfums, Inc. shareholders’ equity

 

699,393

 

 

616,782

 

Noncontrolling interest

 

 

192,777

 

 

171,364

 

Total equity

 

892,170

 

 

788,146

 

Total liabilities and equity

$

1,369,329

 

$

1,308,542

 

 

INTER PARFUMS, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands except per share data)

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2023

 

2022

 

2023

 

2022

Net sales

 

$

328,739

 

 

$

310,788

 

 

$

1,317,675

 

 

$

1,086,653

 

 

Cost of sales

 

 

116,029

 

 

 

110,706

 

 

 

478,597

 

 

 

392,231

 

 

Gross margin

 

 

212,710

 

 

 

200,082

 

 

 

839,078

 

 

 

694,422

 

 

Selling, general and administrative expenses

 

 

193,830

 

 

 

169,122

 

 

 

587,696

 

 

 

492,370

 

 

Impairment loss

 

 

--

 

 

 

7,749

 

 

 

--

 

 

 

7,749

 

 

Income from operations

 

 

18,880

 

 

 

23,211

 

 

 

251,382

 

 

 

194,303

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense

 

 

4,223

 

 

 

1,010

 

 

 

11,253

 

 

 

3,599

 

Loss (gain) on foreign currency

 

 

2,238

 

 

 

4,166

 

 

 

1,582

 

 

 

1,921

 

Interest and investment (income)

 

 

(2,308

)

 

 

(3,145

)

 

 

(10,729

)

 

 

(5,486

)

Other (income) expense

 

 

(192

)

 

 

147

 

 

 

(317

)

 

 

50

 

 

 

 

3,961

 

 

 

2,178

 

 

 

1,789

 

 

 

84

 

Income before income taxes

 

 

14,919

 

 

 

21,033

 

 

 

249,593

 

 

 

194,219

 

 

Income taxes

 

 

6,689

 

 

 

4,104

 

 

 

61,817

 

 

 

43,182

 

 

Net income

 

8,230

 

 

16,929

 

 

187,776

 

 

151,037

 

 

Less: Net income attributable to the noncontrolling interest

 

 

(2,190

)

 

 

330

 

 

 

35,122

 

 

 

30,099

 

 

Net income attributable to Inter Parfums, Inc.

 

$

10,420

 

 

$

16,599

 

 

$

152,654

 

 

$

120,938

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

$

0.33

 

 

$

0.52

 

 

$

4.77

 

 

$

3.80

 

Diluted

 

$

0.32

 

 

$

0.52

 

 

$

4.75

 

 

$

3.78

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

31,977

 

 

31,893

 

 

31,994

 

 

31,859

 

Diluted

 

 

32,112

 

 

 

32,025

 

 

 

32,140

 

 

 

31,989

 

 

Dividends declared per share

$

0.625

 

$

0.50

 

$

2.50

 

$

2.00

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240227509694/en/

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

or

The Equity Group Inc. Karin Daly Investor Relations Counsel (212) 836-9623 / kdaly@equityny.com www.theequitygroup.com