Greetings, and welcome to Inter Parfums, Inc. First Quarter 2026 Conference Call and Webcast. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero for assistance. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Devin Sullivan, Managing Director at The Equity Group and Inter Parfums, Inc. investor relations representative. Thank you. You may begin.

Thank you, Rob. Good morning, everyone, and thank you for joining us today. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar, and Chief Financial Officer, Michel Atwood. As a reminder, 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 headings “Forward-Looking Statements” and “Risk Factors.” Forward-looking statements speak only as of the date on which they are made, and Inter Parfums, Inc. undertakes no obligation to update the information discussed. Inter Parfums, Inc.’s 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 is now my pleasure to turn the call over to Jean Madar. Jean, please go ahead.

Thank you, Devin, and good morning, everyone. We started off the year broadly in line with expectations, with consolidated sales increasing 2% on a reported basis, reflecting growth from both our U.S.- and European-based operations. Despite mixed results across the portfolio, aided by favorable foreign exchange movements, we were able to generate significant growth across several key markets operating in a more difficult environment while enhancing profitability. Our results reflect the strength of our underlying business, the appeal of our brands, and the disciplined execution of our strategy across a diverse global footprint. Consolidated sales growth in the first quarter reflected strong brand execution and solid performance in select regions, partially offset by macro and regional headwinds. North America, our largest market, increased by 7%, driven by continued category growth and innovative brand extensions, particularly from Coach. Central and South America grew 23%, supported by strong momentum in women’s and men’s Coach franchises and the Montblanc Legend line. Western Europe sales were flat, driven by slow consumer demand. These results were partially offset by softer performance in other parts of the world. Eastern Europe declined 12% driven by operational difficulties in certain markets, which disproportionately impacted Lanvin and Lacoste. Middle East and Africa declined 12% primarily due to recent intensifications of regional wars and conflicts. Asia Pacific sales decreased 7% driven by distribution changes we implemented in 2025 in South Korea and India, and softer consumer demand in Australia and New Zealand, which were partially compensated by strong growth in China. Moving to performance by brand, we saw solid growth from several of our larger brands. Coach increased 30%, reflecting strong sell-in following the launches of new extensions within the Coach Woman and Coach Men franchises—Coach Cherry and Coach Platinum—as well as sustained healthy demand across most existing lines. Montblanc rose 14%, driven by the launch of Legend Elixir, the first launch of the Legend franchise since 2024, and the success of the Explorer Extreme line launched last year and the lower sales base in last year’s first quarter. GUESS, our largest U.S.-based brand, grew 11% in the first quarter, driven by ongoing success of the Iconic franchise, supported by launches of new extensions within the Iconic and Seductive pillars. Roberto Cavalli continued to generate robust results to start 2026, achieving a 32% increase in net sales. Our blockbuster launch from last year, Serpentine, remains a substantial success, opening many more doors for us across the world. The product was a finalist for the Prestige Popular Packaging of the Year award at the Fragrance Foundation last month. Growth during the quarter was also fueled by the latest innovation—Roberto Cavalli Wildheart extension dual gender duo Wild Pink and Wild Blue—and their Roma Soluto, the newest fragrance within the Roma pillar. Other key brands reflected tougher comparisons. Lacoste declined 12% driven by last year’s strong innovation-led growth and weaker Eastern Europe conditions. We launched a new extension late in the first quarter called Original Aqua for men, and we plan to launch several other extensions throughout the year to further elevate the brand. While Donna Karan/DKNY declined 3% off a high prior-year base, we did see a 16% rebound in the Be Delicious core, indicating renewed consumer demand and improving franchise momentum. The Cashmere Mist deodorant also remains a successful product within the Donna Karan/DKNY brand, as it continues to be incredibly popular on TikTok Shop and Amazon. Overall, with the global fragrance market normalizing toward historical growth rates following several years of exceptional performance, capturing market share has taken on greater importance as a key source of momentum. In order to do that, our portfolio offerings must be both diverse and distinguished to reach and appeal to multiple large consumer audiences, especially in a more difficult operating environment. In addition to launching exciting new innovation across our existing portfolio, we are expanding our portfolio with new brands to further amplify our offerings and appeal. During the first quarter, we resumed distribution of the existing lines of Annick Goutal and reopened two store locations in Paris, with another one to open soon. We will continue to develop the brand’s reach and offering within the high-end fragrance market. Also, we are continuing to develop brand new fragrances for L’Enchant and Off White, and these launches will happen in 2027. We expect these two new brands to help us elevate our positioning in the high-end fragrance category. And in January, we announced separate exclusive long-term worldwide fragrance license agreements with David Beckham and Nautica; David Beckham joins our portfolio in 2028 and Nautica in 2030, respectively. Both will be essential for us to expand our offerings in the lifestyle fragrance space that we know quite well. Fragrance continues to stand apart within beauty for its resilience, supported by its role as an accessible luxury and everyday form of self-expression that consumers continue to prioritize even amid macroeconomic and geopolitical uncertainty and more deliberate spending behavior. The category is also benefiting from powerful e-commerce tailwinds, with an increasing number of fragrance products purchased through nontraditional retailers including Amazon, underscoring the growing importance of digital marketplaces in both discovery and conversion. Consumers are also increasingly seeking personalization, which we find through fragrance layering as well as personalized AI-driven recommendations. Whether through social media, major e-commerce platforms, or physical retail, the way consumers discover, evaluate, and engage with fragrance is rapidly evolving. These are powerful channels for discovery, and we are actively leaning into that shift with a focus on storytelling that can bridge multiple channels and offer consumers an immersive and consistent brand experience. To be successful, brands must inspire desire, whether as a gateway into the world of an iconic fashion house—such as Jimmy Choo, Ferragamo, or Coach—or that of a celebrity like the one we will do with Beckham. We are continuing to develop our portfolio to maintain desirability across all our brands. The travel retail market continued to perform well, representing approximately 7% of total net sales, consistent with prior periods. Brands including Roberto Cavalli, GUESS, and Coach have performed well to start the year, with several retailers overall currently showing strength in Europe in particular. We anticipate steady growth in our travel retail business going forward. Despite a dynamic macroeconomic environment, the global fragrance category remains resilient, and we are well positioned to deliver on our goals this year. We remain cautiously optimistic for the balance of 2026, reflecting war and disruption in the Middle East while capturing improving dynamics in other regions. We are confident in our ability to navigate near-term volatility, continue to operate efficiently and profitably, and drive disciplined, sustainable, long-term growth in service of our customers, brand partners, and consumers. With respect to the Middle East, I realize that oftentimes we can fall into the trap of viewing different parts of the world primarily through the lens of how it impacts our business. But our concern for our colleagues and partners in the whole Middle East extends directly to them, their families, and communities. We truly appreciate and acknowledge their contribution during this time of heightened conflict, and of course, we pray for better days ahead. Before I close, I want to highlight that alongside operating our business, strengthening our ESG profile remains a key priority. Our ESG strategy is now in its third year and is going strong. We have seen a great return on our investment in this program across supply chain visibility, our ability to respond to new regulatory requirements, and our external investor ratings. These actions and enhanced measures resulted in Inter Parfums, Inc. receiving its third consecutive ESG rating increase from MSCI. We now sit at BBB and have our sights set on A. Our goal is to continue addressing the environmental and social risks that are most financially material to our business. This approach bears long-term, return-on-investment-focused resiliency with ESG performance. With that, 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 them down into our two operating segments: European- and United States-based operations. As Jean pointed out, we delivered sales of $345 million, representing a 2% increase on a reported basis. On an organic basis, which excludes the impact of foreign exchange and the headwinds generated by the Middle East conflicts, sales declined 3%. Excluding the 1% headwind related to the war in the Middle East, organic sales declined by a more moderate 2%. The foundations of our business remain strong and continue to go from strength to strength. For instance, our top 20 brand-region combinations, which represent 86% of our global sales in Q1, grew 9%. Our direct-to-retail channel, which represents 43% of our sales in Q1, grew 16%. This significant growth has had a sizable positive impact on our P&L, as the direct-to-retail channel has significantly higher gross margins but also requires more SG&A, especially A&P and logistics. Our reported growth benefited from a favorable 4.6% foreign exchange tailwind. While the stronger euro has continued to favor our top line, it also increases our cost base across the P&L and our balance sheet. We are continuing to implement a variety of actions to mitigate that impact and have been pleased with the results. Beginning with gross margins, they expanded by 140 basis points to 65.1% from 63.7% of sales, primarily driven by favorable segment, brand, and channel mix as described above, as well as lower-than-expected destruction costs, which reflect enhanced efficiencies in areas such as inventory management and forecasting. These gains were partially offset by tariffs, which represented an expense of about $6 million during the quarter. We are pleased with the positive effect of our tariff mitigation activities and ongoing cost savings initiatives. Our manufacturing optimization—whereby we are shifting manufacturing closer to the point of sale—continues to contribute favorably to our operations and our cost structure. In combination with select pricing actions we took last year, we expect gross margin stability in 2026. SG&A expenses as a percentage of net sales rose 200 basis points to 43.6% compared to 41.6% in the prior-year period. The increase resulted from a number of factors: royalty costs grew ahead of sales due to the GUESS license extension and unfavorable brand mix; we also had FX impacts as described above and higher logistics costs related to supply chain transitions and channel mix. Our A&P spending was stable at $52 million, approximately 15% of sales, and we continue to invest in line with anticipated sell-out by retailers to help drive traffic across all distribution channels, which we believe are higher than our reported sales. Overall, our consolidated operating income was $74 million for the quarter, a 1% decline from the prior period, resulting in an operating margin of 21.5%, or a 70 basis point decrease from a very high 22.2% in 2025. Below the operating line, we reported a gain of $1.1 million in other income and expense compared to a loss of €1.7 million, leading to a positive year-over-year impact of $2.7 million compared to the 2025 first quarter. Within these numbers was a million-dollar increase in interest income behind a stronger ROI on our excess cash. Moving to tax, our consolidated effective tax rate was stable at 24.6% compared to 24.5% in the prior-year period. These factors led to net income of $43 million, or $1.35 per diluted share, representing an increase of 2% compared to net income of $42 million and $1.32 per diluted share in the prior-year period. As a percentage of net sales, net income rose to 12.6%, broadly in line with the prior-year period. Now moving to our two business segments, starting with European-based operations: net sales rose 2% but declined by 4% on an organic basis. Gross margin expanded by 190 basis points to 67.4% from 65.5%, driven by favorable brand and channel mix, lower-than-expected destruction costs, and some of the pricing that we took last year. These were partially offset by tariffs which represented an expense of $4 million. SG&A increased by 9% to $104 million, with SG&A as a percentage of net sales rising 270 basis points to 41.4% of sales compared to the prior-year period. The increase in SG&A was driven by foreign exchange impacts along with increases in employee-related costs as we are building up our Korean subsidiary, and higher logistics costs related to increased warehouse fees. Royalty costs also grew ahead of sales driven by unfavorable brand mix. Overall, net income attributable to European operations grew 4% to $50 million for the quarter, representing 19.8% of sales compared to 19.4% in the prior-year period. Turning to United States-based operations, net sales rose 2%, helped by a positive foreign exchange tailwind; organic sales were broadly flat. Gross margin remained essentially flat at 58.9% compared to 58.7%, with favorable brand and channel mix as well as lower-than-expected destruction costs offsetting tariffs which represented an expense of about $2 million. While SG&A expense increased 3%, SG&A as a percentage of net sales remained essentially flat at 47.9% compared to 47.6% in the prior-year period. Overall, net income attributable to the U.S.-based operations was broadly flat at $8 million for the quarter, representing 9% of sales. This also reflected a higher effective tax rate of 19.7% in 2026 compared to 18.1% in the prior period, driven by lower tax gain from stock-based compensation. As of March 31, our balance sheet remains strong with $237 million in cash, cash equivalents, and short-term investments, as well as working capital of close to $700 million. From a cash flow perspective, accounts receivable was up 6% and days sales outstanding was at 78 days, up from 74 days in the prior-year period, driven by foreign exchange and changes in channel mix. Despite the increase, we are still seeing strong collection activity and we do not anticipate any issues with collections or accounts receivable, even amid foreign exchange headwinds. On our costs, inventories declined significantly to $370 million as of 03/31/2026 from $390 million a year ago. This represented a seven-day reduction in inventory on hand to 259 days. By effectively managing working capital relative to our sales growth, we again significantly improved our operating cash flow. Cash flow generated from operating activities was positive during the quarter, compared to operating cash usage of $7 million during the 2025 first quarter. We continue to expect strong free cash flow productivity in 2026. Now turning to our guidance and outlook. As outlined in our earnings release issued last evening, we are maintaining our full-year outlook. We continue to expect sales of approximately $1.48 billion and diluted earnings per share of $4.85. Our EPS guidance does not include any benefit from potential tariff refunds. While we remain proactive in mitigating the impacts of tariffs on our cost structure, we are also monitoring the possibility of IEPA tariff refunds this year, which could total approximately $17 million. These potential tariff refunds are not included in our outlook for 2026; however, should they occur, we would likely take the opportunity to reinvest at least partially in support of our brands and fuel momentum where we think we can get a strong long-term ROI. We continue to anticipate a return to stronger growth in 2027 driven by enhanced innovation, including the development and distribution of our newest brands. Overall, we are seeing moderating demand in several international markets, along with tariff-related pressures on our cost structures, and we are continuing to closely monitor potential inflationary impacts as suppliers adjust pricing. Nevertheless, we remain well positioned with a strong innovation pipeline, enduring global partnerships, and a resilient consumer base that collectively reinforce our confidence in our long-term growth and value creation. With that, operator, please open the line for questions.

Thank you. At this time, we will be conducting a question and answer session. Please ensure your handset is unmuted before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Sydney A. Wagner with Jefferies. Your line is now live.

Hi, thanks for taking our question. So gross margin obviously expanded during the quarter, which was great. Just curious looking ahead, which of those benefits do you view as structural versus more quarter-specific? And then on the category, you have spoken to seeing some normalization, but you have also noted pockets of strength where we are seeing maybe above-category growth. So how do you feel about the portfolio’s ability to capture those pockets of above-fragrance algorithm growth? Thank you.

Gross margin was really a combination of everything going favorably for us this quarter. We had the impact of the pricing increases that we took last year. We had a significantly favorable mix impact coming from our direct-to-retail channel. As you know, the gross margin on our direct-to-retail is significantly higher than when we sell through distributors. It was really a perfect storm. At this point in time, we expect this to normalize over the balance of the year, and this is one of the reasons why we are maintaining our gross margin target flat for the year. I would expect to see some of this mitigating particularly over the course of the second and third quarter. Regarding the portfolio—Jean, do you want to touch on the portfolio piece?

Yes. Regarding the portfolio, I would like to say that our bigger brands are doing better than our smaller brands. When you look at Coach, Jimmy Choo, GUESS, Montblanc, DKNY, they are all in good shape and they will grow this year. We will look at the smaller brands and, in time, we will definitely edit the portfolio—maybe brands that are doing less than $10 million should not be part of the portfolio. That is why we are looking at always increasing the portfolio of brands, looking for bigger brands and bigger potentials, and we are happy to have signed in the first quarter of this year two new licenses, one with Beckham and one with Nautica. Even though they will start later on, they will be a great addition to the portfolio. Regarding geography, we think that there is good potential in the U.S. We see strength in the U.S., primarily department stores, Amazon U.S., and TikTok U.S.; we will perform a bit better than other parts of the world.

Maybe just to build on Jean’s comments: we did see very strong growth in the U.S. market. The market was up 7% in the quarter and was very strong in March; it was up close to 9%. That is really driving and fueling the momentum, reiterating our core portfolio. Our top seven brands grew actually 8% this quarter. So we have a very strong portfolio, and I think we have a very long tail that we need to continue to streamline over time. Overall, I would say a very healthy core. And then in terms of emerging consumer segments, we are playing in some of these small-size, trial-size, lower price points when you think about TikTok. And as you know, with Goutal as well as with Sulphurino, we are starting to play in the higher luxury space, which has historically been one of the faster growing segments in this category.

If I can just poke in one quick follow-up: on that 9% growth you saw in March, are you still seeing that level of growth quarter-to-date, or how did the trends in April compare?

I do not have the April numbers yet. I think we will be getting them in the next couple of days. We are not hearing or seeing anything that seems to be limiting the growth. I think growth in the U.S. continues to be very healthy.

Great. Thank you.

Our next question comes from Susan Kay Anderson with Canaccord Genuity. Your line is now live.

Hi, thanks for taking my questions. It sounds like you feel really good about U.S. growth continuing maybe even into the back half. How are you feeling about Europe and globally in a more normalized fragrance growth environment? And then on newness, no big launches this year, but are you expecting more newness to roll out in the back half versus the first half to maintain share until we get to more blockbuster launches next year and some new licenses? Thanks.

Yes, sure. As much as the U.S. continues to do well, I think Europe is more of a mixed bag. You saw our numbers for Eastern Europe. Eastern Europe is particularly impacted by the war in Ukraine and the challenging economic situation there. There has been a dramatic slowdown in purchasing and consumption, and it is definitely impacting certain brands that have a strong presence there. If you look at Western Europe, it is also a mixed bag. There are certain markets like Spain that continue to do well, but we are seeing a significant slowdown in markets like France and Germany—very large fragrance markets. Those are two markets where we are seeing very sluggish growth, even some decline; the last couple of quarters have been declining in France. Conversely, on the positive side, Latin America continues to do well. As the economies improve and the middle class expands, that will represent a long tail of growth in the future. Asia has been a little bit more temporary; we have had to make some changes in our distribution both in Korea and in India, and that is weighing down a bit on our growth, but that should eventually pick up once that situation improves. Jean, I will let you address the innovation piece.

The second part of your question, Susan, was are we going to have a blockbuster in the second part of the year? The answer is, like we have said before, this year of 2026 is not a big year for blockbusters. We really have a concentration of new launches—new big blockbusters—in 2027. We knew that. That is why we animate the portfolio with flankers, so we still have innovation but not as big as what we expect in 2027. It is a coincidence that we have so many new big launches in 2027. Actually, all our biggest brands will have a new franchise, a new pillar, in 2027. So for a year without huge innovation, I think we are doing quite well.

And then maybe just one follow-up on pricing. You will start to lap the price increases you took last year in August, and you talked a little bit about inflation maybe impacting COGS a little bit. How should we think about pricing as we start to cycle those price increases from last year? Are you expecting to take any more price this year?

Our priority is to make sure we are offering the right consumer value with the offering. We have historically been very prudent with pricing. Last year we had to take pricing because of the tariffs, and we mostly took pricing here in the U.S. Outside of the U.S., there was very little pricing. At this point in time, unless we see something dramatic happening, it is unlikely we will take any pricing, especially in light of our innovation program. We may take some pricing as we launch new lines next year—it is always an opportunity when you launch something new to elevate the brand and price up—but we are not taking straight pricing on the existing lines. It is going to be more innovation pricing.

I totally agree. We do not like pricing here. We do it when we are really forced. Pricing is not the right answer to maintain or increase sales. We think that the retail price of our fragrances is well adapted at a more democratic level. I do not see pricing unless something like a tariff happens like last year, where we were forced—like everybody else in the industry—to react, but to date, that is not the case.

Okay. Great. Thank you so much for all the details. Good luck for the rest of the year.

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

Hi. I just wanted to ask you, given that you are seeing the growth in the marketplace with demand outpacing your competitors, is this consumers just trying out your products because they are seeing your advertisements, or is there some sort of loyalty to your brands that you are seeing this year that you were not seeing in prior years?

Great question. It depends on the brand; I think it is a little bit of both. We have some loyal customers coming back when the bottle is empty and they buy again the first. We also have a lot of curious new customers that are targeted by our aggressive digital advertising and buy a fragrance from our portfolio. For instance, I was looking at young boys anywhere from 13 to 17 years old buying a lot on TikTok, buying a lot on Amazon, and buying quite expensive fragrances. They have, apparently, the resources to do so. This is very interesting for us, and we are going in the future to look at these customers. Of course, teenage girls were always part of our target, but this is for us a new trend, and we are going to look at this carefully. Michel, want to add something?

I would just say this is a category where people are always exploring. You have people that are loyal to a fragrance and wear the same fragrance forever, and some have a core fragrance that they keep and then a couple of new ones that they try on special occasions. What is important is to always be present when the consumer is top of mind. It is one of the reasons that we have spread out our A&P more evenly across the year. As you recall, we used to spend everything in the fourth quarter; we are now spending more regularly, and I think that is helping sustain demand. It is also important to always look good in store and be present in all the right channels. A lot of the work we have done, whether it is with Amazon or with TikTok in anticipating emerging channels, has been quite successful for us.

Yes, that was going to be my follow-up. Given that you are seeing some efficiency or response to your advertising online, does that make you want to change your A&P in any way or put more weight toward what you are seeing respond? I am just trying to gauge if there is a possibility of upside sales here.

You love asking us questions about A&P ROI. The challenge with A&P is you know that it works; you do not always know how everything works. The tools have gotten better, but generally speaking, we have plenty of opportunities to spend more to get a better return. It is about managing profitable growth and managing the short term, midterm, and long term. Certainly, and that is one of the reasons why you probably heard this in my prepared remarks: if we see more upside coming through in the form of tariff refunds, we will try to reinvest some of that. We believe that there is more upside here. Again, we want to do this responsibly, in terms of managing the top and the bottom line. We are constantly looking at ROI. Ten years ago, everybody was doing TV, and now everybody is doing digital. We are constantly evolving. We are investing a lot right now on Amazon and TikTok. We are always looking for that edge and that ROI, and I think that is a constant optimization opportunity.

Great. Thank you.

Our next question comes from Analyst with Berenberg. Your line is now live.

Yes. Hi, Jean and Michel. Thanks for the presentation. I have two or three questions; I will ask them one by one, if that is okay. First, about Lacoste—could you help us understand how you are looking at the year as a whole for Lacoste given the soft start? I understand the comment on Eastern Europe, but it is quite an important growth lever for EU ops generally. Do you feel like you can recover some of what you lost in Q1 for that brand specifically?

I am not worried at all about Lacoste, to be honest with you. In the first quarter, we had difficult comparisons. I think we can recoup definitely toward the end of the year. What is important is that in 2027 we are going to have a very important launch for Lacoste. I saw the product; it is great. The advertising will look great. So Lacoste is in very good shape. It is true that Eastern Europe was too slow—this explains a weak first quarter—but nothing to worry about.

I would just add that Q1 and Q2 last year were really insane growth. We grew 30% in the first quarter; we grew 60% in the second. We had a huge amount of innovation. We are feeling pretty good about Lacoste overall as a brand, and some of the challenges we are seeing this quarter are really related to footprint and disproportionate impact. Lacoste is primarily strong in Europe, and as growth slows down, it is impacting the brand disproportionately. But the brand is very healthy, and we are feeling really good about it.

Perfect. Thank you. Second, how did orders trend through Q1—maybe putting the Middle East to one side as an exceptional circumstance? Do you feel more positive on the rest of the countries now than you did in, say, January or February?

I can try to answer that. We put our guidance for 2026 in November 2025, when we said that we would do $1.4448 billion. We have not changed the guidance even though there is a big conflict in an important region—the Middle East—which represents 7% of our sales. That means that we think that we will be able to find some growth outside. It is also a good thing to have a conservative guidance at the beginning of the year because we sell in 120 countries, and with so many geopolitical threats that we cannot control, we do not have to lower guidance even though there are difficult times in important regions. As of now, business is doing well. The orders that we received are in line with our projections. Michel, you want to add something?

Our orders have been broadly in line with our expectations. The dip in the Middle East really happened in March and impacted March disproportionately. We do expect that quarter two will also be impacted disproportionately. Today, if we think about Q2, we are seeing Q2 as being flattish versus last year. Until we see how this settles and eventually picks up, we are going to continue to be prudent.

Very clear. Thank you. Third and final question: on the direct-to-retail channel, I know you have taken in-house Korea because you had to, but are there any markets where you feel like you are closer to reaching a scale where you could potentially in-source those? Would love to hear more about any projects you are working on there.

Please, Michel.

I would say we are very happy with the partnerships. At the end of the day, the question is: what are you looking for? Are you looking for gross margin, or are you looking for total shareholder return? In a lot of the markets where we are currently present, we have great distributor partners—many we have been working with for many years. We are quite pleased with the level of progress and return on investment. There are always opportunities, particularly as we grow, to consider certain large markets, but the question is what do you get for it? Yes, you might get a better gross margin, but you will also get more expense, more inventory to manage, and more accounts receivable. At the end of the day, where are we going to get the best TSR? With the footprint we have, I think we have the best TSR. If something comes up at some point which makes more sense, we may consider it. At this point in time, we are not really looking to convert distributors to affiliates.

I totally agree. Korea was an opportunity; we took it. We can reevaluate, but nothing forces us to change from a distributor to subsidiaries.

We have reached the end of the question and answer session. I would now like to turn the call back to Michel Atwood for closing comments.

Thank you again for joining us today. Thank you to our teams for their continued dedication and agility in navigating this uncertain environment and helping us drive the efficiencies supporting our ongoing success. I would like to mention that I will be participating in the Jefferies Conference in Nantucket in June. If you would like to participate, please reach out to your sales representative at Jefferies for information. If you have any additional questions, please contact Devin Sullivan from The Equity Group, our IR representative. Thank you, and have a great day.

This concludes today’s conference. You may disconnect your lines at this time, and thank you for your participation.