Greetings and welcome to the Interparfums First Quarter 2025 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Karin Daly, Vice President at Equity Group and Interparfums' Investor Relations Representative. Please go ahead, Karin.

Thank you, Kevin. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar; and Chief Financial Officer, Michel Atwood. On behalf of the company, I would like to note that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. These factors may be found in the company's filings with the Securities and Exchange Commission under the heading Forward-Looking Statements and Risk Factors. Forward-looking statements speak only as of the date on which they are made, and Interparfums undertakes no obligation to update the information discussed. As a reminder, Interparfums consolidated results include two business segments. European-based operations through Interparfums SA, the company's 72% owned French subsidiary and United States-based operations. It's now my pleasure to turn the call over to Jean Madar. Jean?

Thank you, Karin. Good morning, everyone, and thank you for joining us on today's call. We started the year on a strong note with our reported net sales increasing by 5% or 7% on a like-for-like basis. Three of our top brands, Coach, Jimmy Choo, and Donna Karan/DKNY performed exceptionally well, as did our newest brand, Lacoste and Casale in their second year under our management. We also launched several compelling fragrances that contributed to our results, and we have many more scents to unveil for the balance of the year. Our prestige brand portfolio, the robust distribution network and agile business model has positioned us well to deliver strong and encouraging results. The flexibility of our supply chain allows us to respond swiftly during challenging periods to minimize potential disruptions and to consistently maintain our service level and competitive position. Fragrance stands out within the beauty industry for its resilience, driven by strong brand loyalty and its appeal as an accessible luxury, especially emphasized during times when consumers are more selective with their spending. Our top brands continued to drive growth at our European-based operations. Jimmy Choo's legacy franchises, I Want Choo and Jimmy Choo Man, which included the introduction of Jimmy Choo Man Extreme performed exceptionally well. The new Coach for Men Eau de Parfum with NBA superstar Jason Tatum as the new face of Coach fragrances drove Coach's growth. Item demand for Solférino fragrance continued in early 2025 as well. As for Montblanc, sales are down compared to the prior year period as a result of the timing of innovation, but we are confident that the brand will achieve more favorable comparisons for the balance of the year with the upcoming launch of Explorer Extreme as a catalyst. For our United States-based operations, net sales rose 3% on a like-for-like basis on top of 11% organic sales growth during the 2024 first quarter. Donna Karan/DKNY fragrance sales rose by 5%, resulting from the continued strength of our Cashmere franchise. Although we continue to expect sales gains for this in the full year, fragrance sales declined slightly during the quarter given the high bar set in the prior year period when the brand grew by 21%. With consumer demand for high-quality and concentrated scents showing no signs of letting up, we continue to roll out new fragrances that appeal to their preferences, including the recent launches of Ferragamo Fiamma, our first blockbuster launch for the brand, which was distributed at the end of March, expressing modern ability in Ferragamo Place, Florence, Italy. And we also noted Lacoste's launch, L1212 silver and silver lows. We will also introduce a new blockbuster for Roberto Cavalli in June called Certain Time. We have a strong lineup of fragrance extensions for many brands, including all our largest brands: Jimmy Choo, Montblanc, Coach, GUESS, Donna Karan, Ferragamo and Lacoste. Plus, we will be adding a new extension for Kate Spade, Hollister, Lagerfeld and Van Cleef families. As we look ahead, we are continuing to strategically refine our brand portfolio to build an exceptional group of brands that further solidifies our position in the prestige and luxury categories. That sometimes calls for exiting the license agreements with some of our smaller or underperforming brands. These brands represent a small portion of our overall portfolio. Our focus is on offsetting the exit by continuing to grow our existing portfolio while adding new high potential brands that better align with our long-term growth strategy. This is already in the works as we are preparing to launch our own brand called Solférino in July. And, as we mentioned on our last call, we will assume full ownership of all of white brand names and registered trademarks in 2026. In addition, we announced the acquisition of the Annick Goutal brand in March, which is also set to officially join our portfolio in 2026. Planning is already well underway for both Off-White and Goutal, with exciting developments to be unveiled in the months ahead. As a testament to the strength of our brand partnership, we renewed our Coach license for another five years through June 2031. Before I turn it over to Michel, I would like to briefly mention a few key operational updates. In terms of our omnichannel capabilities, we sell directly to many retailers in key markets such as France, the United States and Italy. This direct model delivers higher margins compared to wholesale distribution, though our wholesale partners remain essential for achieving broader market reach and will continue to be a vital part of our strategy. E-commerce, as you know, is an increasingly important and fast-growing part of our business, driven by the ongoing digital shift in consumer behavior, strong performance and expanding presence on Amazon while platforms like Vivabox and TikTok shop continue to gain traction powered by the reach and engagement of our content creators and influencers across social media platforms. Regarding our supply chain, streamlining our operation is more manageable than ever. And as mentioned also in our previous call, we are making significant progress in transitioning out of our operated facility in Data New Jersey. By the second half of 2025, we expect to fully utilize third-party logistics companies for packing, shipping, warehousing and order fulfillment. This strategic shift will reduce overhead costs and enhance our agility, enabling us to better respond to consumer needs and market dynamics. A key area of interest is, of course, tariffs, and Michel will answer some of your questions later. We're actively scenario planning and beginning to implement strategies to mitigate the potential impact of the recent tariffs on our business through three key interventions. Firstly, we are looking to try to better align our supply chain footprint to the countries where the products are sold. This means producing in Europe fragrances that sell in Europe, and producing in the US fragrances that sell in the US. Some of these changes will be quick, while others will take, of course, more time. Secondly, we are identifying alternative sourcing for some of the parts, components like plastic and metal that we still purchase from China and need to import into the US. Thirdly, we are considering implementing mid-single-digit price increases on select brands and regions this summer, aligned with, but less aggressive than broader industry trends, as a way to offset the additional costs we will inevitably not be able to fully indicate. Our game plan is clear, but we will adjust our execution once we have more certainty of how tariffs will evolve after this 90-day moratorium. Overall, we do not view these factors as posing a material risk to the company. While we navigate the current macro environment, the global fragrance market remains strong, and we are well positioned to deliver on our goals for the year. We are focused on making continued progress across all fronts of our business from sales and earnings to ESG scores. Among these objectives is to improve our MSCI score. We have steadily been improving and recently moved up to a BBB rating. We also have line of sight to BBB, which we target to achieve with the next major rating update. I will now turn it over to Michel for a review of our financial results. Michel?

Thank you, Jean, and good morning, everyone. I will begin by discussing the consolidated results before breaking it down into our European and United States-based operations. As Jean shared and as previously reported, we delivered net sales of $339 million, a 5% increase from the first quarter of 2024. On a like-for-like basis, our sales grew by 7%, and we remain on track to meet our guidance for the year. As a reminder, there is some seasonality to our business as a result of gifting occasions and launch cycles, so not every quarter will always necessarily line up. Gross margin expanded by 120 basis points to 63.7% from the prior year period as a result of favorable brand and channel mix. SG&A expenses as a percentage of net sales increased modestly by 10 basis points to 41.6%, with $52 million in A&P expenses to support sell-through at our retailers and drive traffic across all distribution channels, both in-store and online. Once again, with 7% growth in A&P, we remain committed to continuing to spend A&P ahead of our top-line growth while funding it through scale and other efficiencies. Our royalty expenses paid to brand owners or licensors averaged 8% of net sales during the first quarter, which is broadly in line with our historical run rates, but slightly favorable to the prior year period, largely due to brand mix. Overall, our consolidated operating income was $75 million for the quarter, a 10% increase from the prior year period, resulting in an operating margin of 22% or 120 basis point improvement from 2024 first quarter. Other income and expense for the three months ended March 31, 2025, was a loss of $1.7 million as compared to a gain of $2.1 million in the corresponding period in the prior year, leading to a negative quarter-over-quarter impact of $3.8 million. One of the main factors behind this swing is foreign exchange. We saw a gain of $900,000 in the first quarter of 2024, but that turned into a loss of $800,000 in the first quarter of 2025. Another factor is the change in our unrealized gains and losses on marketable securities. In quarter one of 2025, we recorded an unrealized loss of $700,000 compared to $1.4 million unrealized gains in the same period last year. We did not experience a significant change in our blended effective tax rate, which was 24.5%, up 60 basis points from 23.9% from the prior period, largely driven by geographic mix. For our European-based operations, net sales rose 7% or 9%, excluding the impact of foreign exchange. Gross margin increased by 150 basis points, driven by favorable brand and channel mix, and in a high base period, which last year was particularly impactful. While SG&A expenses increased 6% to $96 million, SG&A as a percentage of net sales decreased 40 basis points to 38.7% of net sales from 39.1% in the prior year period. This reduction was driven by scale benefits in fixed costs and favorable brand mix on royalties, partially offset by higher A&P expenditure. Overall, net income attributable to European operations based grew 7% to $48 million for the quarter. Now turning to our United States-based operations, net sales increased by 3% on a like-for-like basis on top of the 11% like-for-like gain in 2024 first quarter. On a reported basis, net sales declined by 1% as a result of the discontinuation of the Dunhill license, which had a negative 4% impact. Gross margins remained flat at 58.7% as our brand and channel mix remained consistent. SG&A expenses finally increased 2% to $45 million, largely driven by the annualization impact of the infrastructure and headcount investments made throughout 2024 to support the growth of the business, plus higher A&P spending, which was partially offset by efficiencies realized in other SG&A expenses. Net income attributable to US-based operations was $9 million for the quarter as compared to just below $10 million in the prior year period. At March 31, our balance sheet remains strong with $172 million in cash and cash equivalents and working capital of $600 million. Needless to say, the hot topic is tariffs. As a global import and export fragrance company with no owned manufacturing facilities, we have much flexibility with our vast group of trusted partners. As Jean mentioned, while we are making a concerted effort to manufacture products more locally to the point of sale, we have some exposures on the components and gifts with purchases front. We have not seen any material impact from tariffs yet, mainly due to the inventory we had previously built up and our FIFO accounting, but we are actively working with our counterparts to source components from locations other than China to mitigate any future cost increases. We are also accelerating the conversion of raw materials into finished goods. At March 31, finished goods represented 63% of our inventory. Finally, from a cash flow perspective, accounts receivable was up 8% from the prior year and days sales outstanding was 74 days, similar to the prior year period. We have a strong collection process with limited risk. By effectively managing our working capital increases relative to our sales growth, we again significantly improved our operating cash flow, reducing cash used in operating activities by $45 million from $52 million in the prior year period to $7 million in the first quarter of 2025. We continue to expect strong free cash flow productivity in 2025. And as you know, we have initiated a share repurchase program. As announced in our press release yesterday, our regular quarterly cash dividend of $0.80 per share will be paid on June 30, 2025, to shareholders of record on June 13, 2025. Despite the ongoing volatility across the macroeconomic landscape, we remain confident in the ability of our business and the ongoing momentum of the global fragrance market to drive another record year for Interparfums. As such, we are reaffirming our full-year guidance for 2025 of $1.51 billion in net sales and EPS of $5.35 a share. As always, we will revisit guidance and share our expectations with the intention to continue to provide transparency to our shareholders. With that, operator, please open the line for questions.

Our first question is coming from Susan Anderson from Canaccord Genuity. Your line is now live.

Hi, thanks for taking my question. Nice job on the quarter. Maybe if you can give some more color, I guess, just on the US business, kind of what you're seeing, if you're still seeing some destocking there by the retailers or if you're still seeing a sell-in mismatch with the sell-out. And then also, I think North America was up 14%. So if you can maybe just talk about the rest of the drivers there given that the US was only up 3%. Thanks.

Michel, you want to take that?

Yes, sure. Yes, overall, I think, as you know, we had last year, there was some destocking that happened at the beginning of the year, but that was largely abated as the year progressed. At this point in time, we're not really seeing a significant disconnect between sell-in and sell-out. Obviously, retailers continue to be focused on cash and are managing their inventories tightly. But overall, we're not really seeing a significant impact there. Actually, our US business was quite strong this quarter despite the market being a little bit tight. As you know, last year, the market was up 20%, which was a sizable increase year-over-year. This year, the market is actually down for the quarter by 2%. But if you look at March and February, both months were actually more in line with being slightly up versus the prior year period, so about 5% growth. So overall, despite the month of January being a bit challenging, I think it was driven by the fact that the month of January this year had 4 weeks, while it had 5 weeks last year. So, there's some mechanical effects there. Overall, the market is holding up pretty well, and if anything, what we're seeing is some moderate share growth here in the US. So hopefully, that answers that question.

That's simply good color. And then maybe if you could just talk about globally, I guess, what you're seeing from a consumer perspective in terms of fragrance trends. Are you seeing any slowdown in Europe, I guess, and then also in Asia.

Just go ahead.

In general, the first quarter was not as strong as last year, but it remained positive. We are solely focused on fragrance, which continued to grow in the first quarter compared to the other segments of the beauty industry, namely makeup and skincare. In Europe, however, the situation is more challenging, particularly in France and Germany, where the NPD numbers were quite low or possibly negative in the first quarter. In Asia, the market is moving in a different direction; in China, there hasn’t been much activity, but this is balanced by positive developments in Australia and certain Southeast Asian countries. We anticipate smaller growth than last year, but the fragrance business is still on an upward trajectory.

Okay, great. Thanks so much. That’s really helpful. Good luck this year.

Thank you.

Thank you. Next question is coming from Korinne Wolfmeyer from Piper Sandler. Your line is now live.

Hey, good morning team. Thank you for taking the question. I do want to touch a little bit more on tariffs and any other color you can provide us on how you're quantifying the overall tariff exposure both direct and indirect? And I know it's going to be a minimal impact, and it seems like you have a lot of efforts in place to mitigate. But how should we be thinking about the gross margin progression for the remainder of 2025 and even into 2026 when considering the tariffs? Thanks.

We will do our best to respond. It's important to note that we do not import any finished products from China, so we aren't directly affected by finished goods from there. However, some components we use, such as metal pieces, caps, and colors, do come from China, which does have some impact on us. The 10% tariff on goods coming from Europe to the U.S. is where we might feel an impact. As I mentioned earlier, for products where sales are split evenly between the U.S. and Europe, we plan to manufacture some of these items in both locations. Regarding tariffs, we will face higher rates than last year. However, we believe we can offset this through price adjustments, negotiations, and potentially relocating some manufacturing based on where the products are sold. Our improved IT and information systems enable us to analyze these factors swiftly to make informed decisions, but it is certainly a challenge. Michel?

Yes, sure. Thanks, Jean. Yes, hi Korinne. Tariff right now, we've estimated if we do nothing, the scenario is about 300 basis points. We have a number of interventions that Jean has talked about that should enable us to get that down by about two-thirds. The rest will take a bit of time. And what we're planning to do is offset that through pricing. So, to answer your question around gross margin, because of the FIFO accounting and because we do have high inventory levels, we're not expecting any significant impact this year. And by the time it kicks in, we think the pricing actions that we'll be taking will offset that. Now again, there's a lot that can happen between now and the end of the moratorium, the 90-day moratorium. While we have plans in place and we're feeling comfortable that we know how to mitigate this. Ultimately, it's going to depend a lot on what really happens. Some of the actions that we're taking may be triggered or not depending on that situation. But overall, we're feeling pretty good about our ability to mitigate the impact.

Thanks very much.

I would like to add that we have, on average, nine months of inventory for our products. Therefore, we will not experience an immediate impact and we still have several months to find the right solution regarding the tariffs. As mentioned, we will adjust pricing on certain product lines, but not all. If tariffs are implemented, we will maintain the price increase. If tariffs are removed, we will allocate that funding for additional advertising. However, once we decide to raise prices, we won't be able to reverse that decision.

Great. Thank you for that helpful information. I would like to ask one more question about the operating margin for the quarter. It was a bit higher than we anticipated, and I know there were some factors contributing to that. Can you provide more details on the main components of that increase and how we should consider the sustainability of that improved operating margin for the rest of the year? Thank you.

Yes, Korinne. So, I mean there are really two key drivers of the operating margin. One was really the brand mix and the channel mix that drove the higher gross margin that was expected. A lot of the sales upside that we got actually came from our US domestic market, which comes at a higher gross margin because it's direct to retail. So that was clearly a big factor in the upside surprise. On the other hand, when we look at our A&P investments, we were expecting to invest a little bit more in our original plans. And I think as we look through the situation, we felt it wasn't necessary. So we're shifting some of that to the second quarter. But those are really the two main drivers of the change.

Wonderful. Thanks so much.

Thank you.

Thank you. Next question is coming from Ashley Helgans from Jefferies. Your line is now live.

Hi. Thanks for taking our questions. Congrats on the nice quarter. So just want to know how you think about premiumizing the portfolio in a recessionary scenario? And do you still anticipate luxury to outperform as a category? Or do you think we might start to see a bit of a trade down? Thanks.

Michel, if you want to try to answer?

The luxury category continues to grow at a faster rate than Prestige, which will always be a significant part of our business. However, the growth is clearly coming from luxury, as consumers are becoming more engaged with the category. Increased involvement leads to greater interest, resulting in a demand for more premium and distinctive products. We expect the luxury segment to continue outperforming. Our strategy reflects this with the decisions we've made regarding our brand portfolio. With Van Cleef, we are enhancing distribution and premiumization, alongside launches like Solférino and the recent acquisition of Annick Goutal, which are all positioned in the upper luxury segment. We are also exploring more luxury offerings through collections with some brands in our portfolio where it fits, such as the Cashmere Collection by Donna Karan and MCM's Park Collection. We continue to focus on the higher end of the segment to deliver what consumers are actively seeking.

Yes. In general, when I look at our portfolio, we have performed better with brands that have products selling at over $100 or €100 at retail. That's why we are introducing a new MCM collection at $150 retail for three months and we're introducing a new Roberto Cavalli blockbuster at $120 or $130. This is a higher price point than before. We think that it's a good positioning to have. There is strong demand and the consumer is willing to pay. The good news is that more and more people in the US and in Europe, and of course, in Asia are starting to understand the quality of the product. They are more interested in more concentrated fragrances, so it resonates better, and we're seeing good success at this higher price point.

Great. Thanks so much.

Our next question comes from Hamed Khorsand from BWS Financial. Your line is now live.

Yeah. Hi. First off, just following up on this conversation about luxury and premium. Do you feel like it has to be a price move to attract the consumer or is it the rarity value that's driving the consumer action?

I think it...

It's a mix. Please, go ahead, Michel.

No. I was going to say hi, Hamed, I was going to say that consumers are smart. They don't just buy based on price. Ultimately, it's about the distinctiveness of the offering. As consumers become more sophisticated, I like to use the analogy of beer: you go from mass beer to more craft beer. You see that as consumers become more involved in a category, their tastes evolve and become more refined, and I think they become more engaged. That's what the higher-end fragrances are offering. If you look at some brands that have been very aggressive on pricing without necessarily offering the consumer real value, I think those brands are suffering, as seen by their sales being down in units quite significantly. Consumers are looking for higher quality, and they're willing to pay for the price; they're not just buying because it's more expensive. Jean?

Yes. Absolutely. When we position a product at a higher retail price, it's because we are putting more into the product, and the consumer understands this very well. It's not just the price; consumers do not react solely to a higher price. You have to also offer them quality and value. Distribution is quite important too; where the products are sold plays a big role in the desirability of the product. That's why we are being very careful about where our products are sold.

Okay. And then earlier, you were talking about how there is some strength in the market, at least there was in Q1, and your plans to potentially raise prices during the summer. So why is the sales guidance staying flat?

Yes, go ahead, Michel.

Yes. I think the sales guidance is remaining flat. I mean, we grew 5%. Our guidance right now is at 4%. As you can appreciate, there is a lot of volatility right now; I mean there's FX. If you look at the last month, the euro has gone from 1.03 to 1.13, which is a 10-point swing. We are still trying to understand the potential impacts of the tariffs. I think what you're hearing is some degree of prudence here. Right now, our run rates are giving us this guidance, and we tend to be a little bit prudent in our guidance gestures. Until we feel that upside is potentially materializing, we'll continue to be conservative with our guidance.

Yes, if I may say, for me, it's obvious that we cannot, at this point of the year and with all that's going on in the world, increase or adjust the guidance. It's perhaps more important now than ever to be very prudent. A lot of things could happen. Look, nobody was expecting these tariffs. Tomorrow, we could have some countries banning products. So I think we've managed this company with prudence, but we're also realistic. If we need to address or revisit guidance, we will do so, but it's very, very early to make that decision now.

Thank you.

Thank you, Hamed.

Thank you. Next question is coming from Luca Kona from Lamberty Capital. Your line is now live.

Hi. Thank you for your understanding with the technical difficulties.

We have reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Okay. All right. Thanks so much. So thank you for joining our call today, and really special thanks to our dedicated teams who continue to work diligently and adapt with fluidity to these uncertain times. It's certainly a bit uncertain, and we've really been driving greater efficiency and contributing to our ongoing success. I'd like to mention a couple of upcoming events. I'll be visiting Boston with Piper Sandler on May 20th. Then in June, I'll be participating in the TD Cowen Consumer Conference here in New York on June 3rd and 4th, and the Jefferies Consumer Conference in Nantucket on June 17th and 18th. A little call out to Ashley, thanks for your help with the logistics there. If you'd like to participate in these events, please reach out to their respective team members. If you have any additional questions, please contact Karin Daly from the Equity Group, who is our Investor Relations representative. Her telephone number and email address can be found in our most recent earnings release. We look forward to meeting with you at these events over the next conference call. Thank you again, and have a great day.

Thank you. That does conclude today's teleconference webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.