Inter Parfums, Inc. Reports 2020 Fourth Quarter and Year End Results

Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the fourth quarter and year ended December 31, 2020. Of note, the average dollar/euro exchange rate for the 2020 fourth quarter was 1.19 compared to 1.11 in the fourth quarter of 2019. For the full years ended December 31, 2020 and 2019, the average dollar/euro exchange rates were 1.15 and 1.12, respectively.

Fourth Quarter 2020 Compared to Fourth Quarter 2019:

  • Net sales were $184.0 million, up 3.5% compared to $177.8 million; at comparable foreign currency exchange rates, consolidated fourth quarter net sales were practically unchanged from those of 2019;
  • Net sales by European based operations rose 8.1% to $139.6 million from $129.1 million;
  • Net sales by U.S. based operations declined 8.8% to $44.4 million from $48.7 million;
  • Gross margin was 63.9% compared to 64.5%;
  • S,G&A expenses as a percentage of net sales were 49.5% compared to 57.6%;
  • Operating income rose 115% to $26.5 million compared to $12.3 million;
  • Operating margin was 14.4% compared to 6.9%;
  • The effective income tax rate was 28.8% compared to 25.7%;
  • Net income attributable to Inter Parfums, Inc. rose 80.0% to $14.7 million from $8.2 million; and,
  • Net income attributable to Inter Parfums, Inc. per diluted share was $0.47 compared to $0.26.

Thus for the year as a whole, net sales declined 24.5% to $539.0 million from $713.5 million in 2019. At comparable foreign currency exchange rates, net sales declined 25.6%. Net income attributable to Inter Parfums, Inc. declined 36.6% to $38.2 million from 2019’s $60.2 million; and net income attributable to Inter Parfums, Inc. per diluted share declined to $1.21 from $1.90 per diluted share in 2019.

Jean Madar, Chairman & CEO of Inter Parfums stated, “As we’ve reported in January, we ended the year with a surprisingly strong fourth quarter, in fact our best ever fourth quarter ever in terms of sales. Our largest European brands Montblanc, Jimmy Choo, and Coach achieved comparable quarter sales growth of 9.8%, 13.4%, and 18.0%, respectively, all the more gratifying in that no new products were launched in that period. We are also very pleased by the preliminary sales of Anna Sui Sky, which began to rollout in the final quarter of 2020, contributing to that brand’s 62.3% increase in fourth quarter sales.”

He continued, “Throughout the past year, the COVID-19 pandemic and its repercussions broadly and negatively impacted sales in all regions, with the steepest year-over-year sales declines in two of our smaller markets, the Middle East and Eastern Europe, down 35.5% and 40.0%, respectively. Our two largest markets, North America and Western Europe, had far more modest sales declines of 17.8% and 20.7%, respectively. Much of the 28.2% sales decline in Asia was attributable to the dramatic reduction in air travel, and corresponding impact on the travel retail business.”

Discussing new initiatives undertaken in 2020, Mr. Madar pointed to the signing of a license with the luxury brand Moncler. The first new fragrance under the Moncler brand is scheduled for the first quarter of 2022. “In addition,” he said, “we acquired 25% of Divabox SAS, owner of the Origines-parfums e-commerce platform for beauty products, which should enhance the introduction of dedicated fragrance lines and products designed to address a specific consumer demand for this distribution channel and accelerate our Company’s digital development.”

Russell Greenberg, Executive Vice President and CFO stated, “Our consolidated 2020 gross margin was 61.4% compared to 62.5% in 2019. Gross margin for European operations was 64.0% compared to 65.7% in 2019. Two factors contributing to the 111-basis point decline was the weaker dollar in 2020 and the approximately $2 million charge relating to the assumption of a return liability for products sold by the former licensee of a license we entered into in 2019. For U.S. operations where the decline in sales was far more acute than at our European operations, the gross margin declined to 51.8% from 52.5% in 2019, as certain expenses such as depreciation of tools and molds together with the distribution of point-of-sale materials amplified the decline in gross margin.”

He continued, “Selling, general and administrative expenses declined 23.6% compared to 2019, and as a percentage of net sales, were 48.4% and 47.8% for 2020 and 2019, respectively. Due to the effects of the COVID-19 pandemic, a substantial portion of the reduction in selling, general and administrative expenses in 2020 was attributable to the postponement of most new product launches until 2021. In 2020, advertising and promotional expenses represented 17.0% of net sales as compared to 20.3% in 2019.”

Mr. Greenberg also noted, “Cash provided by operating activities aggregated $65.0 million and $76.5 million in 2020 and 2019, respectively. We closed the year with working capital of $445 million, including approximately $296 million in cash, cash equivalents and short-term investments, a working capital ratio of over 3.8 to 1, and only $10.1 million of long-term debt.”

2021 New Product Highlights
Mr. Madar continued, “For our European operations, we recently debuted Kate Spade New York, our first new fragrance for the brand. In the U.S., the scent is already being carried by major department stores, beauty retailers and is being sold through e-commerce. The fragrance is also debuting soon in Europe, which will be followed by Asia, the Middle East and Latin America in the second quarter. With regard to our larger brands, in the first half of the year, Montblanc is adding an extension to its Explorer collection for men. For the Jimmy Choo fragrance portfolio, I Want Choo for women and an Urban Hero flanker fragrance for men will begin to rollout in the first half. In the second half, we’ve got an extension for Coach Dreams and an entirely new women’s line for Lanvin is unveiling.”

Highlighting major launches in the pipeline within U.S. operations Mr. Madar noted, “For our newest brand, MCM, we have a genderless namesake fragrance debuting in MCM stores in the spring which will be followed by a broader international rollout. The Bella Vita women’s collection debuts in GUESS stores, as well as stores in the brand’s major markets, Russia and Asia in the spring of this year, with retail distribution in the rest of the world coming in spring 2022. The brand is also launching Effect, a complete men’s fragrance and grooming collection beginning mid-year. Anna Sui Sky actually debuted in China and Hong Kong late last year and is now rolling out throughout Asia and other markets where the brand has strong traction. Oscar de la Renta boutiques will be first to carry a new women’s scent, Alibi, later this month, to be followed by a global rollout. For Abercrombie & Fitch, we have a completely new duo scheduled to be on store shelves this summer, and for Hollister, we have a fragrance duo launching this year.”

Dividend Reinstated at Annual Rate of $1.00 per Share
Mr. Greenberg pointed out, “In 2020, effective cost controls and cash management enabled us to minimize the impact of the sudden drop in sales resulting from the COVID-19 pandemic. One defensive measure undertaken by our Board of Directors was the suspension of the cash dividend. The strength of our financial position coupled with the favorable near and longer-term outlook of our business were among the reasons why our Board reinstated the payment of a cash dividend, payable quarterly, at the annual rate of $1.00 per share. The next regular quarterly cash dividend of $0.25 per share is payable on March 31, 2021 to shareholders of record on March 15, 2021.”

Raises 2021 Guidance
Mr. Greenberg concluded, “In the three months since we provided initial 2021 guidance, we’ve gained greater visibility as to how the year will unfold, thanks to an influx of orders for established brands, the addition of Kate Spade New York and MCM brand sales, and in general, favorable indications from our distribution network. We now have a reasonable degree of confidence that net sales will fall within the $650 million and $660 million range, once again factoring in negligible travel retail sales. Fixed expenses will increase slightly as we unwind certain steps taken in 2020 to minimize the effects of the COVID-19 pandemic. In addition, with many 2021 product launches scheduled, we are again targeting 21% of net sales for advertising and promotion included in selling, general and administrative expenses. We currently estimate 2021 diluted net income per share to be in the range of $1.40 and $1.45. Guidance assumes that the average dollar/euro average exchange rate remains at current levels and that there is no significant resurgence of the COVID-19 pandemic.”

Conference Call
Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET, Tuesday, March 2, 2021. 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, 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

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,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

Net sales

 

$

184,042

 

$

177,803

 

$

539,009

 

$

713,514

 

 

 

 

Cost of sales

 

66,395

 

63,119

 

208,278

 

267,578

 

 

 

 

Gross margin

 

117,647

 

114,684

 

330,731

 

445,936

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

91,177

 

102,349

 

260,648

 

341,209

Income from operations

 

26,470

 

12,335

 

70,083

 

104,727

 

 

 

 

Other expenses (income):

 

 

 

 

Interest expense

 

460

 

932

 

1,970

 

2,146

Loss on foreign currency

 

2,254

 

310

 

2,178

 

1,128

Interest income

 

(711

)

 

(807

)

 

(2,865

)

 

(3,693

)

Other income

 

(549

)

 

--

 

(549

)

 

--

 

1,454

 

435

 

734

 

(419

)

 

 

 

 

Income before income taxes

 

25,016

 

11,900

 

69,349

 

105,146

 

 

 

 

Income taxes

 

7,216

 

3,066

 

19,381

 

29,076

 

 

 

 

Net income

 

17,800

 

8,834

 

49,968

 

76,070

 

 

 

 

Less: Net income attributable to the noncontrolling interest

 

3,061

 

645

 

11,749

 

15,821

Net income attributable to Inter Parfums, Inc.

 

$

14,739

 

$

8,189

 

38,219

 

$

60,249

 

 

 

 

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

 

 

 

 

Basic

 

$

0.47

 

$

0.26

 

$

1.21

 

$

1.92

Diluted

 

$

0.47

 

$

0.26

 

$

1.21

 

$

1.90

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

Basic

 

31,552

 

31,473

 

31,537

 

31,451

Diluted

 

31,666

 

31,713

 

31,655

 

31,689

 

 

 

 

Dividends declared per share

 

$

0.00

 

$

0.33

 

$

0.33

 

$

1.16

INTER PARFUMS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(In thousands except share and per share data)

 

Assets

 

2020

 

2019

Current assets:

 

 

Cash and cash equivalents

 

$

169,681

 

$

133,417

Short-term investments

 

126,627

 

119,714

Accounts receivable, net

 

124,057

 

133,010

Inventories

 

158,822

 

167,809

Receivables, other

 

1,815

 

2,054

Other current assets

 

16,912

 

17,123

Income taxes receivable

 

2,806

 

169

Total current assets

 

600,720

 

573,296

Equipment and leasehold improvements, net

 

19,580

 

11,107

Right-of-use assets, net

 

24,734

 

28,359

Trademarks, licenses and other intangible assets, net

 

214,108

 

201,983

Deferred tax assets

 

8,041

 

8,004

Other assets

 

22,962

 

6,083

Total assets

 

$

890,145

 

$

828,832

Liabilities and Equity

 

 

Current liabilities:

 

 

Current portion of long-term debt

 

$

14,570

 

$

12,326

Current portion of lease liabilities

 

5,133

 

5,356

Accounts payable - trade

 

35,576

 

54,098

Accrued expenses

 

95,629

 

96,421

Income taxes payable

 

5,297

 

5,865

Dividends payable

 

--

 

10,399

Total current liabilities

 

156,205

 

184,465

Long–term debt, less current portion

 

10,136

 

10,734

Lease liabilities, less current portion

 

21,354

 

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, 31,608,588 and 31,513,018 shares at December 31, 2020 and 2019, respectively

 

32

 

31

Additional paid-in capital

 

75,708

 

70,664

Retained earnings

 

503,567

 

474,637

Accumulated other comprehensive loss

 

(5,997

)

 

(39,853

)

Treasury stock, at cost, 9,864,805 common shares at December 31, 2020 and 2019

 

(37,475

)

 

(37,475

)

Total Inter Parfums, Inc. shareholders’ equity

 

535,835

 

468,004

Noncontrolling interest

 

166,615

 

140,994

Total equity

 

702,450

 

608,998

Total liabilities and equity

 

$

890,145

 

$

828,832

Contacts:

Inter Parfums, Inc.
Russell Greenberg, Exec. VP & CFO
(212) 983-2640
rgreenberg@interparfumsinc.com
www.interparfumsinc.com

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