Compared to 2019, 25%
Increase in Sales Produces 82% Increase in EPS
Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for
the second quarter ended June 30, 2021. The average dollar/euro
exchange rate for the current second quarter was 1.20 compared to
1.10 and 1.12 in the second quarter of 2020 and 2019,
respectively.
Second Quarter Highlights:
($ in millions, except per share
data)
2021
2020
2019
2021 v 2019
Net Sales
$207.6
$49.5
$166.2
25%
Gross Margin
64%
54%
64%
--
Operating Income (loss)
$44.7
$(5.5)
$22.5
99%
Operating Margin
22%
(11)%
14%
800 bps
Net Income (loss) attributable to
IP
$22.7
$(3.1)
$12.3
84%
Diluted EPS (loss per share)
$0.71
$(0.10)
$0.39
82%
In light of the near cessation of business in the second quarter
of 2020, the Company is comparing its current midyear results with
those of 2019. For the first half of 2021, net sales rose 18% to
$406.1 million from $344.5 million in the same period of 2019. At
comparable foreign currency exchange rates, net sales rose 16%.
Year-to-date net income attributable to Inter Parfums, Inc. rose
61% to $50.3 million compared to 2019’s $31.2 million. For the six
months ended June 30, 2021 and 2019, diluted earnings per share
were $1.58 and $0.99, respectively, for an increase of 60%. The
average U.S. dollar/euro exchange rate was 1.20 and 1.13 for the
six months ended June 30, 2021 and 2019, respectively.
Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted,
“Once again, last year’s outbreak of the COVID-19 pandemic and the
business conditions that ensued make comparisons with the very
depressed second quarter of 2020 mostly irrelevant. Far more
meaningful is a comparison with the second quarter of 2019 and the
operating leverage resulting from the nearly 25% increase in net
sales in 2021.”
He continued, “Through the first half of 2021, sales in our
largest market, North America, rose 59% compared to the same period
in 2019, while sales in Western Europe and Asia approximated those
of the first half of 2019. Two of our smaller markets, Eastern
Europe and Central and South America, experienced sales growth of
54% and 10%, respectively, over the first half of 2019. The only
region where sales declined was the Middle East, by 23% to be
precise. Similarly, there has been growth of our four largest
brands. In the first six months of 2021, Montblanc, Jimmy Choo,
Coach, and GUESS brand sales rose 3%, 39% 34% and 58%,
respectively, compared to the first half of 2019. In the first half
of 2019, the debut of Montblanc Explorer caused a surge in brand
sales, which helps explain the modest increase in Montblanc brand
sales in the current first half.”
Discussing recent events, Mr. Madar highlighted the signing of a
transaction agreement for the exclusive worldwide license for the
production and distribution of Ferragamo brand perfumes. Subject to
certain conditions, the 10-year license is expected to start in
October 2021 and has a 5-year optional term. “We will operate
through a wholly-owned Italian company, based in Florence, with
both legacy and newly created entrants produced in Italy. Once the
business and existing inventory are transferred to us, we will be
in a better position to estimate the contribution Ferragamo
fragrances will make to 2021 sales. With our flexible business
model, strong balance sheet, global distribution network, and
committed staff, our pursuit of additional license agreements
continues as we focus on established brands whose owners are
seeking to reinvigorate their fragrance business. While there can
be no assurance that any agreements will be finalized, adding
select brands to our portfolio remains a high priority.”
Mr. Madar concluded, “The rollout of products unveiled over the
course of the first half continues. These include Montblanc
Explorer Ultra Blue, I Want Choo for Jimmy Choo, Coach Sunset
Dreams, the Kate Spade signature scent, Rochas Girl, Alibi for
Oscar de la Renta, Bella Vita for GUESS, Away by Abercrombie &
Fitch, Canyon Escape for Hollister and Driven by Dunhill. Of
special note, the MCM genderfluid fragrance that we introduced in
first quarter continues to dazzle. With orders nearly triple our
initial first year expectations, we have had to refill the pipeline
several times to keep pace with sales. Brand extensions dominate
our new product pipeline for the remainder of the year, including
flankers for Jimmy Choo Urban Hero, the Oscar de la Renta Bella
family, the Hollister Wave collection, and the Anna Sui Fantasia
pillar. We recently debuted Effect, a full suite of men’s grooming
and fragrance products under the GUESS label.”
Russell Greenberg, Executive Vice President and CFO noted, “The
slight decline in second quarter gross margin compared to the same
period in 2019 is primarily attributable to a weaker dollar and its
effect on European operations. In the current second quarter, gross
margin for European operations was 67% compared to 68% in the same
period in 2019. Gross margin for U.S. operations was 53%, up from
52% in the second quarter of 2019. Once again, sales rose at a
faster rate than we had expected, as was the case in the first
quarter. As a result, 2021 second quarter promotion and advertising
expenditures, included in S, G & A expense, of $33.2 million or
16% of net sales, were well below what we would typically spend in
a quarter when sales exceeded $200 million. By way of comparison,
in the second quarter of 2019, promotion and advertising
expenditures were $36.4 million or 22% of net sales of $166.2
million. For the year as a whole, we continue to expect promotional
and advertising expenses to approach historical levels of 21% of
net sales.”
Mr. Greenberg also noted, “Our 2021 second quarter and
year-to-date bottom lines were negatively impacted by two items.
The first is interest expense incurred in connection with the
borrowings related to the April 2021 acquisition of the future
headquarters of our Paris-based 73% owned subsidiary, Interparfums
SA. The second was an unusually high tax rate, which factors in a
global tax settlement with the French Tax Authority covering the
period January 1, 2010 through December 31, 2020 relating to a
wholly-owned subsidiary of Interparfums SA.”
Mr. Greenberg continued, “We closed the second quarter with
working capital of $461.7 million, including approximately $298
million in cash, cash equivalents and short-term investments, and a
working capital ratio of 3.1 to 1. The $133.2 million of long-term
debt relates to the previously mentioned headquarters acquisition,
which was financed by a 10-year €120 million (approximately $143
million) bank loan. Approximately €80 million of the variable rate
debt was swapped for fixed interest rate debt. Cash provided by
operating activities aggregated $38.1 million for the six months
ended June 30, 2021.”
Reaffirms Increase in 2021 Guidance
Mr. Greenberg concluded, “The uptick in COVID-19 cases and the
highly transmissible Delta variant could change our expectations,
but based upon year-to-date results, and current order levels for
the second half, we continue to expect 2021 net sales of
approximately $750 million, resulting in diluted net income per
share of $1.95.” Guidance assumes that the average dollar/euro
average exchange rate remains at current levels, there is no
significant resurgence of the COVID-19 pandemic and excludes
potential Ferragamo fragrance sales following the closing of the
pending transaction.
Dividend
The Company’s regular quarterly cash dividend of $0.25 per share
will be paid on September 30, 2021 to shareholders of record on
September 15, 2021.
Conference Call
Management will conduct a conference call to discuss financial
results and business developments at 11:00 AM ET on Tuesday, August
10, 2021. 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. 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.
Founded in 1982, Inter Parfums, Inc. develops, manufactures and
distributes prestige perfumes and cosmetics as the exclusive
worldwide licensee for Abercrombie & Fitch, Anna Sui,
Boucheron, Coach, Dunhill, Graff, GUESS, Hollister, Jimmy Choo,
Karl Lagerfeld, Kate Spade, MCM, Moncler, Montblanc, Oscar de la
Renta, Paul Smith, Repetto, S.T. Dupont and Van Cleef & Arpels.
Inter Parfums is also the owner of Lanvin fragrances and the Rochas
brand. Through its global distribution network, the Company’s
products are sold in over 120 countries.
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, 2020 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 (LOSS)
(In thousands except per share
data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2021
2020
2021
2020
Net sales
$
207,573
$
49,506
$
406,101
$
194,330
Cost of sales
75,223
22,662
148,502
78,444
Gross margin
132,350
26,844
257,599
115,886
Selling, general and administrative
expenses
87,695
32,367
162,591
103,630
Impairment loss
--
--
2,394
--
Income (loss) from operations
44,655
(5,523
)
92,614
12,256
Other expenses (income):
Interest expense
1,270
361
1,647
1,362
(Gain) loss on foreign currency
309
(13
)
(1,557
)
(967
)
Interest income
(768
)
(754
)
(1,155
)
(1,761
)
Other (income) expense
93
--
(98
)
--
904
(406
)
(1,163
)
(1,366
)
Income (loss) before income
taxes
43,751
(5,117
)
93,777
13,622
Income
taxes (benefit)
14,715
(2,134
)
28,115
3,306
Net income (loss)
29,036
(2,983
)
65,662
10,316
Less: Net income attributable to the
noncontrolling interest
6,379
135
15,343
3,375
Net income (loss) attributable
to
Inter Parfums, Inc.
$
22,657
$
(3,118
)
$
50,319
$
6,941
Earnings (loss) per share:
Net income (loss) attributable to Inter
Parfums, Inc. common shareholders:
Basic
$
0.72
($
0.10
)
$
1.59
$
0.22
Diluted
$
0.71
($
0.10
)
$
1.58
$
0.22
Weighted average number of shares
outstanding:
Basic
31,653
31,532
31,642
31,531
Diluted
31,799
31,532
31,786
31,667
Dividends declared per share
$
0.25
--
$
0.50
$
0.33
CONSOLIDATED BALANCE
SHEETS
(In thousands except share and
per share data)
(Unaudited)
ASSETS
June 30,
2021
December 31, 2020
Current assets:
Cash and cash equivalents
$
149,713
$
169,681
Short-term investments
148,100
126,627
Accounts receivable, net
176,540
124,057
Inventories
163,482
158,822
Receivables, other
19,394
1,815
Other current assets
22,395
16,912
Income taxes receivable
265
2,806
Total current assets
679,889
600,720
Buildings, equipment and leasehold
improvements, net
135,452
19,580
Right-of-use assets, net
33,701
24,734
Trademarks, licenses and other
intangible assets, net
203,652
214,108
Deferred tax assets
6,187
8,041
Other assets
49,438
22,962
Total assets
$
1,108,319
$
890,145
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
32,246
$
14,570
Current portion of lease liabilities
6,564
5,133
Accounts payable – trade
59,970
35,576
Accrued expenses
100,911
95,629
Income taxes payable
18,502
5,297
Total current liabilities
218,193
156,205
Long–term debt, less current
portion
133,244
10,136
Lease liabilities, less current
portion
29,351
21,354
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 31,654,138 and
31,608,588 shares at
June 30,
2021 and December 31, 2020, respectively
32
32
Additional paid-in capital
77,529
75,708
Retained
earnings
538,690
503,567
Accumulated other comprehensive
loss
(17,457
)
(5,997
)
Treasury
stock, at cost, 9,864,805 shares at June 30, 2021 and December 31,
2020
(37,475
)
(37,475
)
Total
Inter Parfums, Inc. shareholders’ equity
561,319
535,835
Noncontrolling interest
166,212
166,615
Total equity
727,531
702,450
Total liabilities and equity
$
1,108,319
$
890,145
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210809005602/en/
Contact at Inter Parfums, Inc. Russell Greenberg, Exec. VP &
CFO (212) 983-2640 rgreenberg@interparfumsinc.com
www.interparfumsinc.com -or- Investor Relations Counsel The Equity
Group Inc. Fred Buonocore (212) 836-9607/ fbuonocore@equityny.com
Linda Latman (212) 836-9609/ llatman@equityny.com
www.theequitygroup.com
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