CORRECTING and REPLACING Inter Parfums, Inc. Reports Record 2023 Second Quarter Results
The first sentence of the "Full-Year 2023 Guidance" section should read: Mr. Atwood continued, “As we reported in our second quarter 2023 net sales release on July 24th, we continue to look for full-year 2023 net sales to approximate $1.3 billion (instead of $1.3 million), or growth of 20% from full-year 2022.
The updated release reads:
INTER PARFUMS, INC. REPORTS RECORD 2023 SECOND QUARTER RESULTS
Increases Earnings per Diluted Share Guidance from $4.25 to $4.55
Inter Parfums, Inc. (NASDAQ GS: IPAR) (“Inter Parfums” or the “Company”) today reported its financial results for the second quarter and six months ended June 30, 2023.
Second Quarter 2023 Financial Highlights
($ in millions, except per share data)
2023
2022
% Change
Net Sales
$309
$245
26%
Gross Margin
$188
$154
23%
Gross Margin (as a percentage of net sales)
60.9%
62.8%
(190 bps)
Operating Income
$55
$45
21%
Operating Margin
17.8%
18.6%
(80 bps)
Net Income (attributable to Inter Parfums, Inc.)
$35
$28
27%
Earnings Per Diluted Share
$1.09
$0.86
27%
The average dollar/euro exchange rate for the current second quarter was 1.09 compared to 1.06 in the second quarter of 2022, while for the first half of 2023, the average dollar/euro exchange rate was 1.08 compared to 1.09 in the first half of 2022, leading to a positive 1.3% foreign exchange impact for the quarter and a negative 0.5% for the first half on Net Sales.
At comparable foreign currency exchange rates, consolidated second quarter net sales increased 25% from the second quarter of 2022.
Operational Commentary
“With our second quarter net sales increasing 26%, on top of the healthy 18% growth from the prior year period, we are taking full advantage of the positive trends and momentum in the fragrance market while growing our market share with our innovative programs,” said Jean Madar, Chairman & Chief Executive Officer of Inter Parfums.
“Through the first half of the year, our robust growth has been geographically spread across our 120-country distribution footprint and included signs of renewed life in the travel retail business.
“We have always taken a conservative approach to the reopening of the Chinese fragrance market, and we will continue to be cautious and patient as we are confident in China’s long term prospects. China’s potentially immense market has been showing signs of improvement, but not enough to really move the needle. We anticipate continued modest sales growth for the remainder of 2023 and into 2024.”
Mr. Madar continued, “We are also well on our way in strategizing and building out the products, promotions, advertising and launch schedule for the newest and upcoming licenses, Roberto Cavalli and Lacoste, while also maintaining focus on all the other iconic brands in our fragrance portfolio.
“As we look into the back half of 2023, we are confident in achieving another excellent year as supply chain disruptions and inflationary impacts on components are mostly behind us, and our brands continue to perform exceedingly well, in conjunction with the favorable growth catalysts in the fragrance market.”
Financial Commentary
Michel Atwood, Chief Financial Officer of Inter Parfums, noted, “On a dollar basis, our second quarter operating income increased 21% to $55 million, and net income attributable to Inter Parfums, Inc. increased 27% to $35 million, or $1.09 per share compared to $0.86 per share in the prior year period.
“Our second quarter consolidated operating margin was strong at 17.8% but down 80 basis points, as a percentage of net sales. While we registered scale benefits from sales growth, price increases and favorable brand and channel mix, this was offset by a one-time conservative inventory reserve of $7 million related to certain underperforming brands within our European operations, for which we had built inventory during the pandemic to protect service levels. Excluding this one-time charge, both gross margins and operating margins would have expanded compared to the prior year period.”
Full-Year 2023 Guidance
Mr. Atwood continued, “As we reported in our second quarter 2023 net sales release on July 24th, we continue to look for full-year 2023 net sales to approximate $1.3 billion, or growth of 20% from full-year 2022.
“Today, we are also raising our 2023 earnings per diluted share guidance from $4.25 to $4.55, or growth of 20% from $3.78 for full-year 2022.
“It is important to note that only modest sales from China are included in our full-year 2023 guidance. Additionally, our sales guidance does not yet include initial sales of the newly acquired fragrance licenses, Roberto Cavalli, as we expect to start shipping in November/December 2023, and Lacoste fragrances, which are expected to start shipping in 2024.
“Our current 2023 guidance assumes that the dollar/euro average exchange rate remains at current levels.”
Dividend
The Company’s regular quarterly cash dividend of $0.625 per share will be paid on September 30, 2023, to shareholders of record on September 15, 2023.
Share Buyback Program
In the first half of 2023, the Company initiated a share repurchase program. Over the course of the first half of 2023, the Company repurchased 85,060 shares at a cost of $11.3 million. These shares are classified as treasury shares on the accompanying balance sheet.
The Company plans to continue repurchasing shares throughout 2023.
Second Quarter 2023 Conference Call
Management will host a conference call to discuss financial results and business developments beginning at 11:00 am ET on Wednesday, August 9, 2023.
Interested parties may participate in the live call by dialing (877) 423-9820 (toll-free) or (201) 493-6749 (international).
Participants are asked to dial-in 10 minutes before the conference call is scheduled to begin.
A live audio webcast will also be available in the “Events” tab within the Investor Relations section of the Company’s website at www.interparfumsinc.com, or by clicking here. The conference call will be available for webcast replay for approximately 90 days following the live event.
About Inter Parfums, Inc.
Operating in the global fragrance business since 1982, Inter Parfums, Inc. produces and distributes a wide array of prestige fragrance and fragrance-related products under license agreements with brand owners. The Company manages its business in two operating segments, European based operations, through its 72% owned subsidiary, Interparfums SA, and United States based operations.
The portfolio of prestige brands includes Abercrombie & Fitch, Anna Sui, Boucheron, Coach, Donna Karan, DKNY, Ferragamo, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade, MCM, Moncler, Montblanc, Oscar de la Renta, Roberto Cavalli, Ungaro, and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world through an extensive and diverse network of distributors. Inter Parfums, Inc. is also the registered owner of several trademarks including Lanvin and Rochas.
Forward-Looking Statements
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, 2022 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.
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
(Unaudited)
ASSETS
June 30,
2023
December 31,
2022
Current assets:
Cash and cash equivalents
$
74,311
$
104,713
Short-term investments
112,449
150,833
Accounts receivable, net
236,554
197,584
Inventories
360,018
289,984
Receivables, other
14,730
28,803
Other current assets
24,993
15,650
Income taxes receivable
386
157
Total current assets
823,441
787,724
Property, equipment and leasehold improvements, net
168,264
166,722
Right-of-use assets, net
28,005
27,964
Trademarks, licenses and other intangible assets, net
292,319
290,853
Deferred tax assets
14,333
11,159
Other assets
25,302
24,120
Total assets
$
1,351,664
$
1,308,542
LIABILITIES AND EQUITY
Current liabilities:
Loans payable - banks
$
4,958
$
--
Current portion of long-term debt
29,080
28,547
Current portion of lease liabilities
5,236
5,296
Accounts payable – trade
91,040
88,388
Accrued expenses
194,036
213,621
Income taxes payable
17,324
8,715
Total current liabilities
341,674
344,567
Long–term debt, less current portion
138,565
151,494
Lease liabilities, less current portion
24,491
24,335
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 31,975,670 and 31,967,300 shares at
June 30, 2023 and December 31, 2022, respectively
32
32
Additional paid-in capital
95,984
90,186
Retained earnings
669,688
620,095
Accumulated other comprehensive loss
(48,739)
(56,056)
Treasury stock, at cost, 9,949,865 and 9,864,805 shares at June 30, 2023 and December 31, 2022, respectively
(48,764)
(37,475)
Total Inter Parfums, Inc. shareholders’ equity
668,201
616,782
Noncontrolling interest
178,733
171,364
Total equity
846,934
788,146
Total liabilities and equity
$
1,351,664
$
1,308,542
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Net sales
$
309,244
$
244,725
$
620,967
$
495,403
Cost of sales
120,840
90,943
229,606
182,963
Gross margin
188,404
153,782
391,361
312,440
Selling, general and administrative expenses
133,383
108,385
246,061
205,825
Income from operations
55,021
45,397
145,300
106,615
Other expenses (income):
Interest expense
2,276
1,023
4,633
1,907
(Gain) loss on foreign currency
(746)
(279)
13
(2,518)
Interest and investment (income) loss
(1,977)
(464)
(7,359)
1,002
Other income
(7)
(328)
(48)
(444)
(454)
(48)
(2,761)
(53)
Income before income taxes
55,475
45,445
148,061
106,668
Income taxes
12,957
10,925
34,635
25,857
Net income
42,518
34,520
113,426
80,811
Less: Net income attributable to the noncontrolling interest
7,566
6,903
24,406
17,895
Net income attributable to
Inter Parfums, Inc.
$
34,952
$
27,617
$
89,020
$
62,916
Earnings per share:
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic
$
1.09
$
0.87
$
2.78
$
1.98
Diluted
$
1.09
$
0.86
$
2.77
$
1.97
Weighted average number of shares outstanding:
Basic
32,006
31,845
32,012
31,843
Diluted
32,162
31,952
32,161
31,981
Dividends declared per share
$
0.625
$
0.50
$
1.30
$
1.00
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