Inter Parfums, Inc. Reports 2014 Second Quarter Results

Inter Parfums, Inc. (NASDAQ GS:IPAR) today reported results for the second quarter ended June 30, 2014.

Second Quarter 2014 Compared to Second Quarter 2013:

• Net sales of ongoing brands (excluding Burberry brand sales) increased 22.1% to $118.2 million from $96.8 million; at comparable foreign currency exchange rates, net sales of ongoing brands increased 20.0%;
• Reported net sales of $118.2 million were up 0.6% compared with $117.5 million in the 2013 second quarter when Burberry brand sales were included;
• European-based operations generated sales of ongoing brands of $94.7 million, up 31.2% from $72.1 million;
• Sales by U.S.-based operations were $23.5 million, compared to $24.7 million;
• Gross margin was 57.6% of net sales, up from 54.1%;
• S, G & A expense as a percentage of net sales was 46.8% compared to 47.4%;
• Operating margin was 10.9% of net sales compared to 6.7% of net sales;
• Net income attributable to Inter Parfums, Inc. was $6.1 million compared to $3.8 million; and,
• Basic and diluted earnings per share were $0.20 compared to $0.12.

Jean Madar, Chairman & CEO of Inter Parfums commented, “With respect to European-based operations, new product launches and the continuing success of several established scents produced the 31.2% increase in second quarter sales of ongoing brands. Montblanc fits both categories as brand sales were up 88% due to the spring launch of Emblem coupled with the strong performance of the brand’s Legend fragrances. One of the highlights of 2014 was the debut of the Karl Lagerfeld fragrance duo which contributed approximately $4 million in incremental sales for the quarter. In addition, sales of existing collections by S.T. Dupont and Paul Smith, the Repetto signature scent, and Lanvin’s Eclat d’Arpège exceeded those of last year’s second quarter. Together these gains more than offset the 6% comparable quarter decline in Jimmy Choo brand sales; as previously noted, in last year’s second quarter, Jimmy Choo brand sales rose more than 40% driven by the launch of Flash. Later this fall, Jimmy Choo Man is unveiling, and with better than expected pre-orders, we anticipate that this new scent will be a catalyst for growth in brand sales.”

Mr. Madar continued, “The slight decline in U.S.-based sales was in great part attributable to the challenging comparison with last year’s second quarter when we commenced sales of Dunhill legacy fragrances. We expect brand momentum to build as Icon, our all new Dunhill scent, makes a selective debut late this year and rolls out more broadly in 2015. International distribution of Fatale and Fatale Pink for Agent Provocateur has been proceeding and we look forward to U.S. distribution later in the fall. While Anna Sui has been our leading brand in Asian markets, especially China, we will have another important name in that market when we introduce our inaugural fragrance collection for Shanghai Tang in China later this year, which is to be followed by a select international roll-out in 2015. While legacy Oscar de la Renta scents are included in 2014 sales, we believe our new women’s scent, which is scheduled to debut in 2015, will be an important catalyst for the brand.”

Discussing first half sales by region, Mr. Madar also noted, “We are very pleased that growth occurred across nearly all geographic markets. Consolidated sales of ongoing brands in Western Europe and North America, our two largest markets, were up 28% and 19%, respectively. While Asian sales have been flat through the first half, sales in Central/South America are running nearly 52% ahead of 2013, and in the Middle East, they were up 30%. Although Eastern Europe represents a small portion of our business, conditions in Russia made that region the only down market through the first half of 2014.”

Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc. stated, “As expected, gross margin in the second quarter of 2014 increased to 57.6% of sales. The increase was primarily attributable to the impact of the sale of our remaining Burberry inventory, at cost, during the second quarter of 2013. Additionally, selling, general and administrative expenses in the second quarter of 2014 were relatively unchanged as a percentage of sales from that in the 2013 period.”

Mr. Greenberg continued, “Our financial position remains very strong. We entered the second half with $409 million in working capital, including approximately $275 million in cash, cash equivalents and short-term investments and no long-term debt.”

2014 Guidance

Mr. Greenberg reaffirmed 2014 guidance stating, “We continue to expect net sales to come in at approximately $495 million, or 15% ahead of 2013 net sales of ongoing brands. Net income attributable to Inter Parfums, Inc. should be in the range of $0.93 to $0.95 per diluted share. Guidance assumes the dollar remains at current levels.”

Dividend

The Company’s regular quarterly cash dividend of $0.12 per share will be paid on October 15, 2014 to shareholders of record on September 30, 2014.

Conference Call

Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, August 12, 2014. 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. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. 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.

In the more than 30 years since its founding, Inter Parfums, Inc. has been selected as the fragrance and beauty partner for a growing list of brands that include Lanvin, Montblanc, Jimmy Choo, Boucheron, Van Cleef & Arpels, Karl Lagerfeld, Paul Smith, S.T. Dupont, Balmain, Repetto, Agent Provocateur, Alfred Dunhill, Anna Sui, Shanghai Tang, Oscar de la Renta, Gap, Banana Republic, Brooks Brothers, bebe, and Betsey Johnson. Inter Parfums is known for innovation, quality and its ability to capture the genetic code of each brand in the products it develops, manufactures and distributes in over 100 countries worldwide.

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, 2013 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.

Regulation G, “Conditions for Use of Non-GAAP Financial Measures,” prescribes the conditions for use of non-GAAP financial information in public disclosures. The Company believes that our presentation of the non-GAAP financial information included in this release constitutes important supplemental measures of operating performance, because it provides readers with more complete disclosure and facilitates a more accurate comparison of current results to historic results.