2017 Net Sales and
Diluted EPS Increase by 13.5% and 24.2%,
Respectively
Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for
the fourth quarter ended December 31, 2017.
Fourth Quarter 2017 Compared to Fourth Quarter 2016:
- Net sales were $149.5 million, up 10.9%
from $134.8 million; at comparable foreign currency exchange rates,
net sales increased 6%;
- Net sales by European based operations
rose 15.5% to $115.4 million from $99.9 million;
- Net sales by U.S. based operations were
$34.1 million, down 2.2% compared to $34.9 million;
- Gross margin was 66.1% compared to
63.7%;
- S,G&A expenses as a percentage of
net sales were 61.4% compared to 59.0%;
- Operating income was $4.8 million as
compared to $5.4 million;
- Net income attributable to Inter
Parfums, Inc. increased 12.0% to $4.4 million compared $3.9
million; and,
- Net income attributable to Inter
Parfums, Inc. per diluted share rose 11.1% to $0.14 from
$0.13.
Thus for the year as a whole, net sales increased 13.5% to
$591.3 million, as compared to $521.1 million in 2016. At
comparable foreign currency exchange rates, net sales increased
12%. Net income attributable to Inter Parfums, Inc. increased 24.8%
to $41.6 million or $1.33 per diluted share from 2016’s $33.3
million or $1.07 per diluted share.
Jean Madar, Chairman & CEO of Inter Parfums stated, “In
2017, we grew our footprint in all of our markets. North America
became our largest market with year-over-year sales gains of 19%.
Second place Western Europe grew sales by 8% as did our third
largest market, Asia. Central and South America, the Middle East
and Eastern Europe achieved comparable year sales growth of 16%,
21% and 20%, respectively. Regarding European based operations, our
three largest brands all posted growth for the year, with Montblanc
up 4%, Jimmy Choo up 20%, and Lanvin up 5%. In fact, in 2017, Jimmy
Choo fragrance sales topped the $100 million mark joining Montblanc
in that exclusive club. Our newer brands performed exceptionally
well last year, with Coach and Rochas brand sales growing 149% and
34%, respectively, versus one year earlier. Of note, our first
Coach fragrance only launched mid-2016, and today that brand is our
fourth largest, which was achieved without a legacy fragrance
business. As we’ve reported, we have several brand extensions
launching this year, including Coach Floral and Lanvin Modern
Princess Eau Sensuelle, both of which recently debuted, plus new
extensions for Lanvin’s Éclat d’Arpège and Coach for Men.”
Moving on to U.S. based operations, Mr. Madar noted, “Our two
largest brands in this group, Dunhill and Oscar de la Renta
fragrances, both performed very well. With the recent introduction
of Bella Blanca by Oscar de la Renta, our 2018 launch schedule is
on track with new products for Abercrombie & Fitch, Hollister,
Dunhill, and Anna Sui coming to market throughout the year. A big
boost in incremental sales is expected to come from the addition of
GUESS legacy fragrances to our sales mix after the license starts
on April 1, 2018. We expect that right out of the gate, the GUESS
run rate will make it the largest brand in this group.”
Highlighting several key operating factors impacting
profitability, Mr. Greenberg stated, “The improvement in gross
margin reflects increased sales of higher margin products by our
European operations, much of which was through our distribution
subsidiaries that sell product directly to retailers. Of special
note, sales of Montblanc, Jimmy Choo and Coach products to
retailers in the U.S. are conducted by a Company-owned distribution
subsidiary, and sales of Rochas brand fragrance are concentrated in
France, where we sell directly to retailers, and in Spain, where we
sell through our distribution subsidiary. Selling, general and
administrative expenses rose 14% compared to 2016, but as a
percentage of net sales, were 50% for both 2017 and 2016. Promotion
and advertising included selling, general and administrative
expenses, generally peaks in the fourth quarter and 2017 was no
exception; as a percentage of sales, promotion and advertising was
20.9% in 2017 and 19.0% in 2016.”
Mr. Greenberg pointed out, “For many years, our focus has been
on growing our prestige fragrance business and brand portfolio;
therefore during the fourth quarter of 2017, we set in motion a
plan to discontinue several of our small mass market product lines
over the next few years. In that regard, as of December 31, 2017 we
recorded an impairment loss of $2.1 million and increased our
inventory obsolescence reserves by $0.5 million.”
The Company’s effective income tax rate was 29.2% in 2017 and
35.5% in 2016 noting that in 2017, the French Constitutional Court
released a decision declaring that the nation’s 3% tax on dividends
or deemed dividends enacted in 2012, was unconstitutional. Inter
Parfums has filed a claim for a $3.6 million refund for these taxes
paid since 2015 and recorded the refund claim in its 2017 financial
statements. Partially offsetting the tax refund was a nonrecurring
expense of $1.1 million related to revaluation of deferred tax
assets and liabilities caused by the new lower corporate tax rate
resulting from the Tax Cuts and Jobs Act.
Mr. Greenberg also pointed out, “In 2017, cash provided by
operating activities aggregated $35.9 million and we closed the
year with working capital of $382 million, including approximately
$278 million in cash, cash equivalents and short-term investments,
a working capital ratio of almost 3.3 to 1 and $60.6 million of
long-term debt, including current maturities, incurred in
connection with the 2015 Rochas brand acquisition.”
2018 Guidance Excluding GUESS Contribution
Mr. Greenberg noted, “Once we purchase the GUESS inventory from
the brand’s former licensee and determine how long it will take to
build new inventory, we plan to increase our 2018 guidance to
factor in the GUESS contribution, which we anticipate will begin in
the second quarter of the year. Our target date for announcing the
expected increase in our sales and earnings guidance to include
GUESS is when we announce 2018 first quarter results in May. Thus
for the time being, we are maintaining our previously disclosed
2018 guidance which calls for net sales of approximately $620
million and net income attributable to Inter Parfums, Inc. of
approximately $1.44 per diluted share.” Guidance for 2018 assumes
the dollar remains at current levels.
Dividend
The Company’s regular quarterly cash dividend of $0.21 per share
is payable on April 13, 2018 to shareholders of record on March 30,
2018.
Conference Call
Management will conduct a conference call to discuss financial
results and business developments at 11:00 am ET, on Wednesday,
March 14, 2018. 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.
Founded more than 30 years ago, Inter Parfums, Inc. is a premier
fragrance company with a diverse portfolio of prestige brands that
includes Abercrombie & Fitch, Agent Provocateur, Anna Sui,
bebe, Boucheron, Coach, Dunhill, GUESS, Hollister, Jimmy Choo, Karl
Lagerfeld, Lanvin, Montblanc, Oscar de la Renta, Paul Smith,
Repetto, Rochas, S.T. Dupont and Van Cleef & Arpels. The
fragrance products developed, produced and distributed by Inter
Parfums are sold in more than 100 countries throughout the
world.
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, 2017 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 EndedDecember 31, Twelve
Months EndedDecember 31, 2017 2016 2017 2016
Net sales $ 149,526 $ 134,771 $ 591,251 $ 521,072
Cost of sales 50,725 48,877
214,965 194,601
Gross
margin 98,801 85,894 376,286 326,471
Selling,
general and administrative expenses 91,864 79,503 295,540
258,787
Gain on buyout of license -- (4,652 ) -- (4,652 )
Impairment loss 2,123 5,658
2,123 5,658
Income from operations
4,814
5,385
78,623
66,678
Other expenses (income): Interest expense 498
159 1,992 2,340 Loss on foreign currency 241 207 1,549 595 Interest
income (195 ) (609 ) (2,983 ) (3,331 )
544 (243 ) 558 (396 )
Income before income taxes 4,270 5,628 78,065 67,074
Income taxes (1,502 ) 1,036
22,812 23,826
Net income 5,772
4,592 55,253 43,248 Less: Net income attributable to the
noncontrolling interest
1,372
665
13,659
9,917
Net income attributable to Inter
Parfums, Inc.
$
4,400
$
3,927
$
41,594
$
33,331
Net income attributable to Inter Parfums, Inc.
common shareholders: Basic $ 0.14 $ 0.13 $ 1.33 $ 1.07 Diluted
$ 0.14 $ 0.13 $ 1.33 $ 1.07
Weighted average number of shares outstanding: Basic 31,200
31,115 31,172 31,072 Diluted 31,378 31,231
31,305 31,176
Dividends declared per share $ 0.21 $ 0.17 $
0.72 $ 0.62
INTER PARFUMS, INC. AND
SUBSIDIARIES Consolidated Balance Sheets December 31, 2017 and
2016 (In thousands except share and per share data)
Assets 2017 2016 Current assets:
Cash and cash equivalents $ 208,343 $ 161,828 Short-term
investments 69,899 94,202 Accounts receivable, net 120,749 104,819
Inventories 137,058 96,977 Receivables, other 2,405 7,433 Other
current assets 7,356 6,240 Income taxes receivable 3,468 626
Total current assets 549,278 472,125 Equipment and
leasehold improvements, net 10,330 10,076 Trademarks, licenses and
other intangible assets, net 200,495 183,868 Deferred tax assets
9,658 8,090 Other assets 8,011 8,250 Total assets $ 777,772 $
682,409
Liabilities and Equity Current liabilities: Current
portion of long-term debt 24,372 21,498 Accounts payable - trade
52,609 49,507 Accrued expenses 81,843 62,609 Income taxes payable
1,722 3,331 Dividends payable 6,561 5,293 Total current liabilities
167,107 142,238 Long–term debt, less current portion 36,207 53,064
Deferred tax liability 3,821 3,449 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, 31,241,548 and
31,138,318 shares at December 31, 2017 and 2016, respectively 31 31
Additional paid-in capital 66,004 63,103 Retained earnings 422,570
402,714 Accumulated other comprehensive loss (17,832) (57,982)
Treasury stock, at cost, 9,864,805 common shares at December 31,
2017 and 2016 (37,475) (37,475) Total Inter Parfums, Inc.
shareholders’ equity 433,298 370,391 Noncontrolling interest
137,339 113,267 Total equity 570,637 483,658 Total liabilities and
equity $ 777,772 $ 682,409
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180313006112/en/
Inter Parfums, Inc.Russell Greenberg, 212-983-2640Exec. VP &
CFOrgreenberg@interparfumsinc.comwww.interparfumsinc.comorInvestor
Relations CounselThe Equity Group Inc.Fred Buonocore,
212-836-9607fbuonocore@equityny.comorLinda Latman,
212-836-9609llatman@equityny.comwww.theequitygroup.com
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