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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 7, 2023
Inter Parfums, Inc.
(Exact name of Registrant as specified in its charter)
| Delaware | 0-16469 | 13-3275609 | ||
| (State or other jurisdiction
of incorporation or organization) |
Commission File Number |
(I.R.S. Employer Identification No.) |
||
551
Fifth Avenue, New
York, NY
10176
(Address of Principal Executive Offices)
212.983.2640
(Registrant’s Telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting Material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name
of each exchange on which registered |
||
| Common Stock, $.001 par value per share | IPAR | The Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
Certain portions of our press release dated November 7, 2023, a copy of which is annexed hereto as Exhibit no. 99.1, are incorporated by reference herein, and are filed pursuant to this Item 2.02. They are as follows:
| ● | The 1st, 2nd (consisting of a table), 3rd, 7th , 8th and 9th paragraphs relating to results of operations for the third quarter of 2023 | |
| ● | Portions of the 4th paragraph relating to sales by territory | |
| ● | The 15th – 18th paragraphs relating to the earnings conference call scheduled for November 8, 2023 | |
| ● | The unaudited consolidated statements of income and consolidated balance sheets |
Item 7.01. Regulation FD Disclosure.
Certain portions of our press release dated November 7, 2023, a copy of which is annexed hereto as Exhibit no. 99.1, are incorporated by reference herein, and are filed pursuant to this Item 7.01 and Regulation FD. They are as follows:
| ● | Portions of the 4th paragraph relating to potential sales in China for 2024 | |
| ● | The 5th paragraph relating to Roberto Cavalli and Lacoste licenses | |
| ● | The 6th paragraph relating to advertising and promotional expenses for the 2023 fourth quarter | |
| ● | The 10th – 12th paragraphs relating to guidance | |
| ● | The 21st paragraph relating to forward looking information | |
| ● | The balance of such press release not otherwise incorporated by reference in Item 2.02 or 8.01 |
Item 8.01 Other Events
| ● | The 13th paragraph relating to our cash dividend | |
| ● | The 14th paragraph relating to our share buyback program |
Item 9.01 Financial Statements and Exhibits.
| 99.1 | Our press release dated November 7, 2023 |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused and authorized this report to be signed on its behalf by the undersigned.
Dated: November 7, 2023
| Inter Parfums, Inc. | ||
| By: | /s/ Michel Atwood | |
| Michel Atwood | ||
| Chief Financial Officer | ||
Exhibit 99.1
For Immediate Release
INTER PARFUMS, INC. REPORTS RECORD 2023 THIRD QUARTER RESULTS
Affirms FY2023 Net Sales Guidance; Increases FY2023 Net Earnings Guidance
NEW YORK – November 7, 2023: Inter Parfums, Inc. (NASDAQ GS: IPAR) (“Inter Parfums” or the “Company”) today reported its financial results for the three months and nine months ended September 30, 2023.
| Third Quarter Financial Highlights | |||
| ($ in millions, except per share data) | 2023 | 2022 | % Change |
| Net Sales | $368 | $280 | 31% |
| Gross Profit | $235 | $182 | 29% |
| Gross Margin (as a percentage of net sales) | 63.9% | 64.9% | (100 bps) |
| Operating Income | $87 | $64 | 35% |
| Operating Margin | 23.7% | 23.0% | 70 bps |
| Net Income (attributable to Inter Parfums, Inc.) | $53 | $41 | 28% |
| Earnings Per Diluted Share | $1.66 | $1.30 | 28% |
| At comparable foreign currency exchange rates, consolidated net sales for the three months and nine months ended September 30, 2023, increased 27% and 26%, respectively, compared to the same periods last year. Of note, the average dollar/euro exchange rate for the current third quarter was 1.09 compared to 1.01 in the third quarter of 2022, while for the first nine months of 2023, the average dollar/euro exchange rate was 1.08 compared to 1.06 in the same period in 2022, leading to a positive 4% and 1% foreign exchange impact for the quarter and first nine months, respectively. | |||
Operational Commentary
“We continued to see favorable trends across the robust fragrance industry, high demand for our brands, and success in our launches, extensions, and distribution, all of which combined to produce record quarterly net sales and very strong earnings,” said Jean Madar, Chairman & Chief Executive Officer of Inter Parfums.
“North America continued to be our largest market, with sales increasing 29% in the third quarter compared to the prior year period, and Western Europe followed at 24% sales growth. Asia, our third largest market, performed well with net sales increasing 20% over that same period. We have been able to increase our sell-out in China, namely on Coach, Montblanc and Ferragamo, enabling us to manage down our stock-in-trade levels, which should provide a favorable tailwind in 2024.
“With regard to Roberto Cavalli and Lacoste, we expect to benefit from these recent license acquisitions beginning in 2024. Roberto Cavalli fragrance products are scheduled to start shipping in January 2024, with extensions planned for mid-summer next year. The Lacoste license will take effect in January 2024, and we are well prepared to launch our corresponding strategy and product innovation.”
Mr. Madar concluded, “As in prior years, we are making a major investment in advertising and promotion during the fourth quarter to ensure sell-out at the retail level, build brand awareness and drive continued growth. Once again, we target 21% of our annual net sales for advertising and promotion as we invest aggressively in the fourth quarter to drive sell-through. The first three quarters of 2023 have been incredibly successful, and we look forward to executing on our plans for the remainder of the year.”
| Inter Parfums, Inc. | Page 2 |
November 7, 2023
Financial Commentary
Michel Atwood, Chief Financial Officer of Inter Parfums, noted, “Net income attributable to Inter Parfums, Inc. increased 28% to $53 million, or $1.66 per diluted share, in the third quarter of 2023, compared to $41 million, or $1.30 per diluted share, in the prior year period.
“Overall, in the third quarter we were able to maintain our operating margins as our pricing actions have broadly compensated for inflationary impacts.
“SG&A as a percentage of sales was down 170 basis points to 40.2% as the significant increase in third quarter sales allowed us to better absorb fixed expenses as compared to the prior year period despite increased investments in Advertising and Promotion, and the structural investments we made to support our new licenses.”
2023 Guidance
With an update on 2023 guidance, Mr. Atwood continued, “The ongoing strength in the market, coupled with our year-to-date performance, gives us confidence in the balance of the year. We are affirming our FY2023 net sales guidance of $1.3 billion, or growth of 20% from FY2022, despite geopolitical tensions and the very high fourth quarter 2022 base.
“We are now increasing our earnings per diluted share guidance to $4.75 (previously guided to $4.55), or growth of 26% from $3.78 for FY 2022.”
Guidance for 2023 assumes that the dollar/euro average exchange rate remains at current levels; only modest sales from China are included, and newly acquired fragrance licenses, Roberto Cavalli and Lacoste, are not included.
Dividend
The Company’s regular quarterly cash dividend of $0.625 per share will be paid on December 31, 2023, to shareholders of record on December 15, 2023.
Share Buyback Program
In December 2022, our Board of Directors authorized a share repurchase program of up to 166,060 shares. Over the course of the first nine months of 2023, the Company repurchased 85,060 shares at a cost of $11.3 million. The Company plans to continue repurchasing shares during the balance of 2023.
Third 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, November 8, 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.
| Inter Parfums, Inc. | Page 3 |
November 7, 2023
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.
Contact Information
| Inter Parfums, Inc. | or | The Equity Group Inc. |
| Michel Atwood | Investor Relations Counsel |
| Chief Financial Officer | Karin Daly (212) 836-9623 / kdaly@equityny.com |
| (212) 983-2640 | Linda Latman (212) 836-9609 / llatman@equityny.com |
| www.interparfumsinc.com | www.theequitygroup.com |
See Accompanying Tables
| Inter Parfums, Inc. | Page 4 |
November 7, 2023
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
(Unaudited)
| ASSETS | ||||||||
| September 30, 2023 |
December 31, 2022 |
|||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 79,764 | $ | 104,713 | ||||
| Short-term investments | 103,745 | 150,833 | ||||||
| Accounts receivable, net | 288,085 | 197,584 | ||||||
| Inventories | 364,270 | 289,984 | ||||||
| Receivables, other | 13,645 | 28,803 | ||||||
| Other current assets | 26,847 | 15,650 | ||||||
| Income taxes receivable | 498 | 157 | ||||||
| Total current assets | 876,854 | 787,724 | ||||||
| Property, equipment and leasehold improvements, net | 163,002 | 166,722 | ||||||
| Right-of-use assets, net | 29,359 | 27,964 | ||||||
| Trademarks, licenses and other intangible assets, net | 286,697 | 290,853 | ||||||
| Deferred tax assets | 16,063 | 11,159 | ||||||
| Other assets | 22,422 | 24,120 | ||||||
| Total assets | $ | 1,394,397 | $ | 1,308,542 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Loans payable - banks | $ | 4,501 | $ | — | ||||
| Current portion of long-term debt | 41,768 | 28,547 | ||||||
| Current portion of lease liabilities | 5,687 | 5,296 | ||||||
| Accounts payable – trade | 87,161 | 88,388 | ||||||
| Accrued expenses | 200,065 | 213,621 | ||||||
| Income taxes payable | 23,913 | 8,715 | ||||||
| Total current liabilities | 363,095 | 344,567 | ||||||
| Long–term debt, less current portion | 128,983 | 151,494 | ||||||
| Lease liabilities, less current portion | 25,452 | 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 31,980,805 and 31,967,300 shares at September 30, 2023 and December 31, 2022, respectively |
32 | 32 | ||||||
| Additional paid-in capital | 95,752 | 90,186 | ||||||
| Retained earnings | 703,091 | 620,095 | ||||||
| Accumulated other comprehensive loss | (59,802 | ) | (56,056 | ) | ||||
| Treasury stock, at cost, 9,949,865 and 9,864,805 shares at September 30, 2023 and December 31, 2022, respectively | (48,764 | ) | (37,475 | ) | ||||
| Total Inter Parfums, Inc. shareholders’ equity | 690,309 | 616,782 | ||||||
| Noncontrolling interest | 186,558 | 171,364 | ||||||
| Total equity | 876,867 | 788,146 | ||||||
| Total liabilities and equity | $ | 1,394,397 | $ | 1,308,542 | ||||
| Inter Parfums, Inc. | Page 5 |
November 7, 2023
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net sales | $ | 367,969 | $ | 280,462 | $ | 988,936 | $ | 775,865 | ||||||||
| Cost of sales | 132,962 | 98,562 | 362,568 | 281,525 | ||||||||||||
| Gross margin | 235,007 | 181,900 | 626,368 | 494,340 | ||||||||||||
| Selling, general and administrative expenses | 147,805 | 117,424 | 393,866 | 323,249 | ||||||||||||
| Income from operations | 87,202 | 64,476 | 232,502 | 171,091 | ||||||||||||
| Other expenses (income): | ||||||||||||||||
| Interest expense | 2,397 | 682 | 7,030 | 2,589 | ||||||||||||
| (Gain) loss on foreign currency | (669 | ) | 273 | (656 | ) | (2,245 | ) | |||||||||
| Interest and investment income | (1,062 | ) | (3,343 | ) | (8,421 | ) | (2,341 | ) | ||||||||
| Other (income) expense | (77 | ) | 346 | (125 | ) | (98 | ) | |||||||||
| 589 | (2,042 | ) | (2,172 | ) | (2,095 | ) | ||||||||||
| Income before income taxes | 86,613 | 66,518 | 234,674 | 173,186 | ||||||||||||
| Income taxes | 20,493 | 13,221 | 55,128 | 39,078 | ||||||||||||
| Net income | 66,120 | 53,297 | 179,546 | 134,108 | ||||||||||||
| Less: Net income attributable to the noncontrolling interest | 12,906 | 11,874 | 37,312 | 29,769 | ||||||||||||
| Net income attributable to Inter Parfums, Inc. |
$ | 53,214 | $ | 41,423 | $ | 142,234 | $ | 104,339 | ||||||||
| Earnings per share: | ||||||||||||||||
| Net income attributable to Inter Parfums, Inc. common shareholders: | ||||||||||||||||
| Basic | $ | 1.66 | $ | 1.30 | $ | 4.44 | $ | 3.28 | ||||||||
| Diluted | $ | 1.66 | $ | 1.30 | $ | 4.42 | $ | 3.26 | ||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 31,976 | 31,860 | 32,000 | 31,848 | ||||||||||||
| Diluted | 32,124 | 31,968 | 32,149 | 31,977 | ||||||||||||
| Dividends declared per share | $ | 0.625 | $ | 0.50 | $ | 1.875 | $ | 1.50 | ||||||||