Inter Parfums, Inc. Reports 2019 Fourth Quarter and Year End Results

Nachrichtenquelle: Business Wire (engl.)
02.03.2020, 22:08  |  157   |   |   

Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the fourth quarter and year ended December 31, 2019. Of note, the average dollar/euro exchange rate for the 2019 fourth quarter was 1.11 compared to 1.14 in the fourth quarter of 2018. For the full years ended December 31, 2019 and 2018, the average dollar/euro exchange rates were 1.12 and 1.18, respectively.

Fourth Quarter 2019 Compared to Fourth Quarter 2018:

  • Net sales were $177.8 million, up 0.3% from $177.2 million; at comparable foreign currency exchange rates, net sales increased 1.5%;
  • Net sales by European based operations decreased 4.2% to $129.1 million from $134.8 million;
  • Net sales by U.S. based operations were $48.7 million, up 14.7% compared to $42.4 million;
  • Gross margin was 64.5% compared to 66.1%;
  • S,G&A expenses as a percentage of net sales were 57.6% compared to 60.1%;
  • Operating income rose 16.5% to $12.3 million as compared to $10.6 million;
  • Operating margin was 6.9% compared to 6.0%;
  • Net income attributable to Inter Parfums, Inc. increased 1.8% to $8.2 million compared to $8.0 million; and,
  • Net income attributable to Inter Parfums, Inc. per diluted share was $0.26 for both periods.

Thus for the year as a whole, net sales increased 5.6% to $713.5 million from $675.6 million in 2018. At comparable foreign currency exchange rates, net sales increased 7.8%. Net income attributable to Inter Parfums, Inc. increased 12.0% to $60.2 million from 2018’s $53.8 million; and net income attributable to Inter Parfums, Inc. per diluted share rose 11.1% to $1.90 from $1.71 per diluted share in 2018.

Jean Madar, Chairman & CEO of Inter Parfums stated, “In nearly every region in which we operate, we achieved top line growth in 2019, with sales in North America, our largest market, up 11.4%. Our second largest market, Western Europe, achieved sales growth of 2.6%, while in Eastern Europe, net sales rose 4.7%. The biggest percentage gainer was the Middle East where sales surged 22.4% over the previous year. Sales in Asia, our third largest market, were down nominally in actual dollars, but ahead in constant dollars, which we consider quite respectable in light of trade tariffs on goods coming in and out of China from the United States. Our smallest market, Central and South America, underperformed in 2019, not surprisingly in light of the region’s political, economic and social turmoil.”

He continued, “Regarding our largest brands, Montblanc remains our largest brand, with annual sales up nearly 23%. As we previously reported, the strength of the dollar produced slightly lower sales in actual dollars by Jimmy Choo and Coach, but in constant dollars, sales by these two brands were in fact ahead of 2018. GUESS, whose first full year of fragrance sales under our leadership was 2019, has quickly become the fourth largest brand in our portfolio.”

Russell Greenberg, Executive Vice President and CFO stated, “Our consolidated gross margin was 62.5% and 63.3% in 2019 and 2018, respectively. Gross margin for European operations was 65.7% compared to 66.3% in 2018. As we reported throughout last year, the benefit of a strong dollar on the gross margin was offset by the higher than typical cost of sales for the Montblanc Explorer product line, which launched in the first quarter of 2019. For U.S. operations, gross margin rose to 52.5% from 51.4% in 2018 with the 110 basis point improvement primarily due to the continued growth of higher margin prestige products under licenses.”

He continued, “Selling, general and administrative expenses rose 2.5% compared to 2018, and as a percentage of net sales, were 47.8% and 49.3% for 2019 and 2018, respectively. Once again, promotion and advertising, included selling, general and administrative expenses peaked in the fourth quarter, which brought the total for the full year to 20.3% of net sales, down slightly from 20.7% in 2018. While we budgeted 21% of 2019 net sales for promotion and advertising expenditure, minor fluctuations in certain launch schedules altered our planned spending.”

Mr. Greenberg also noted, “In 2019, there was a $1.1 million loss on foreign currency while in 2018, the loss was $0.3 million, and our effective income tax rate was 27.7% in 2019 and 27.3% in 2018. Cash provided by operating activities aggregated $76.5 million in 2019, and we closed the year with working capital of $389 million, including approximately $253 million in cash, cash equivalents and short-term investments, a working capital ratio of over 3 to 1 and only $10.7 million of long-term debt.”

2020 Plans

For our European operations, Mr. Madar continued, “During the first quarter, we continued the geographic rollouts of products we debuted at the end of last year, including Jimmy Choo Urban Hero and Byzance by Rochas. Our 2020 launch program has begun, most notably with Coach Dreams, an entirely new women’s fragrance family for the brand and L’Homme Rochas. We will have a new women’s scent for Montblanc coming to market later this spring. In addition to initiating distribution of several Kate Spade New York legacy scents in April, come the summer, we will introduce our first new fragrance for the brand. For Jimmy Choo, we have an entirely new women’s scent unveiling in the second half of the year. For U.S. operations, we are gearing for a new blockbuster scent for women under the GUESS banner unveiling this spring in the U.S., followed in the fall by an international rollout. A new fragrance duo for Hollister, Canyon Escape, is also scheduled for a spring launch. We are hopeful that Sky by Anna Sui will bolster brand sales when it debuts in the fall. Our first fragrance collection under the Graff label debuts in Harrod’s for a six-month exclusive starting in the spring, followed by select international luxury distribution.”

2020 Guidance

Mr. Greenberg concluded, “The fundamentals of our business remain strong. However, like most companies doing business around the globe, ours is being impacted by the coronavirus. There are many unknowns as to the duration and severity of the situation which we are closely monitoring. As a result of the trends we have seen recently, such as the significant decline in air travel and consumer traffic in key shopping and tourist areas, we delayed certain launches to later in the year, and therefore, our 2020 guidance needs to be revised. The business challenges change daily, as the track of the virus is unknown, making it very difficult to precisely estimate the impact. If the impact is limited to the first few months of this year, we expect 2020 net sales and net income attributable to Inter Parfums, Inc. to be in line with 2019 results. We are assessing developments constantly and will update these measures as needed and will address the issue on tomorrow’s conference call.”

Dividend

The Company’s regular quarterly cash dividend of $0.33 per share is payable on April 15, 2020 to shareholders of record on March 31, 2020.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET, Tuesday, March 3, 2020. Interested parties may participate by dialing (201) 493-6749; please call in 10 minutes before start time and ask for the Inter Parfums call. To listen to the call over the Internet, go to www.interparfumsinc.com and click on the Investor Relations section.

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 New York, MCM, 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, 2019 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 Statements of Income

(In thousands except per share data)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

 

177,803

 

 

$

 

177,227

 

 

$

 

713,514

 

 

$

 

675,574

 

 

Cost of sales

 

 

63,119

 

 

 

60,095

 

 

 

267,578

 

 

 

248,012

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

114,684

 

 

 

117,132

 

 

 

445,936

 

 

 

427,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

102,349

 

 

 

106,545

 

 

 

341,209

 

 

 

332,831

 

 

Income from operations

 

 

 

 

12,335

 

 

 

 

 

 

10,587

 

 

 

 

 

 

104,727

 

 

 

 

 

 

94,731

 

 

 

 

 

 

 

 

 

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense

 

 

932

 

 

 

1,025

 

 

 

2,146

 

 

 

2,578

 

Loss on foreign currency

 

 

310

 

 

 

436

 

 

 

1,128

 

 

 

251

 

Interest income

 

 

(807

)

 

 

(636

)

 

 

(3,693

)

 

 

(3,957

)

 

 

 

435

 

 

 

825

 

 

 

(419

)

 

 

(1,128

)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

11,900

 

 

 

9,762

 

 

 

105,146

 

 

 

95,859

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

3,064

 

 

 

594

 

 

 

29,076

 

 

 

26,144

 

 

 

 

 

 

 

 

 

 

Net income

 

 

8,834

 

 

 

9,168

 

 

 

76,070

 

 

 

69,715

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to the noncontrolling interest

 

 

645

 

 

 

1,121

 

 

 

15,821

 

 

 

15,922

 

 

 

 

 

 

 

 

 

 

Net income attributable to Inter Parfums, Inc.

$

 

8,189

 

$

 

8,047

 

$

 

60,249

 

$

 

53,793

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic

 

$

 

0.26

 

 

$

 

0.26

 

 

$

 

1.92

 

 

$

 

1.72

 

Diluted

 

$

 

0.26

 

 

$

 

0.26

 

 

$

 

1.90

 

 

$

 

1.71

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

31,473

 

 

 

31,340

 

 

 

31,451

 

 

 

31,308

 

Diluted

 

 

31,713

 

 

 

31,584

 

 

 

31,689

 

 

 

31,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

 

0.33

 

 

$

 

0.28

 

 

$

 

1.16

 

 

$

 

0. 91

 

 
   

INTER PARFUMS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2019 and 2018

(In thousands except share and per share data)

 

Assets

 

 

2019

   

 

2018

 

Current assets:

 

 

 

 

   

 

 

 

 

Cash and cash equivalents

 

$

192,417

 

 

$

193,136

 

 

Short-term investments

 

 

60,714

 

 

 

67,870

 

 

Accounts receivable, net

 

 

133,010

 

 

 

133,320

 

 

Inventories

 

 

167,809

 

 

 

161,778

 

 

Receivables, other

 

 

 

2,054

 

 

 

2,112

 

 

Other current assets

 

 

17,123

 

 

 

12,576

 

 

Income taxes receivable

 

 

169

 

 

 

810

 

 

 

 

 

 

Total current assets

 

 

573,296

 

 

 

571,602

 

Equipment and leasehold improvements, net

 

 

11,107

 

 

 

9,839

 

Right-of-use assets, net

 

 

28,359

 

 

 

--

 

Trademarks, licenses and other intangible assets, net

 

 

201,983

 

 

 

204,325

 

Deferred tax assets

 

 

 

 

 

8,004

 

 

 

5,761

 

Other assets

 

 

 

 

 

6,083

 

 

 

6,302

 

 

 

 

 

 

Total assets

 

$

828,832

 

 

$

797,829

 

 

Liabilities and Equity

 

 

 

   

 

 

 

Current liabilities:

 

 

 

 

 

   

 

 

 

 

Current portion of long-term debt

 

 

$

12,326

 

 

$

23,155

 

 

Current portion of lease liabilities

 

 

 

5,356

 

 

 

--

 

 

Accounts payable - trade

 

 

 

54,098

 

 

 

58,328

 

 

Accrued expenses

 

 

 

96,421

 

 

 

94,668

 

 

Income taxes payable

 

 

5,865

 

 

 

4,396

 

 

Dividends payable

 

 

 

10,399

 

 

 

8,630

 

 

 

 

 

 

Total current liabilities

 

 

184,465

 

 

 

189,177

 

Long–term debt, less current portion

 

 

10,734

 

 

 

22,906

 

Lease liabilities, less current portion

 

 

24,635

 

 

 

--

 

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, 31,513,018 and 31,382,127 shares

 

 

 

   

 

 

 

 

 

at December 31, 2019 and 2018, respectively

 

 

31

 

 

 

31

 

 

Additional paid-in capital

 

 

70,664

 

 

 

69,970

 

 

Retained earnings

 

 

 

474,637

 

 

 

448,731

 

 

Accumulated other comprehensive loss

 

 

(39,853

)

 

 

(33,650

)

 

Treasury stock, at cost, 9,864,805 common shares

 

 

 

   

 

 

 

 

 

at December 31, 2019 and 2018

 

 

(37,475

)

 

 

(37,475

)

 

 

 

 

 

Total Inter Parfums, Inc. shareholders’ equity

 

 

468,004

 

 

 

447,607

 

Noncontrolling interest

 

 

 

140,994

 

 

 

138,139

 

 

 

 

 

 

Total equity

 

 

608,998

 

 

 

585,746

 

 

 

 

 

 

Total liabilities and equity

 

$

828,832

 

 

$

797,829

 

 

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