8-K
INTERPARFUMS INC (IPAR)
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 9, 2020
Inter Parfums, Inc.**
(Exact name of Registrant as specified in its charter)
| Delaware | 0-16469 | 13-3275609 |
|---|---|---|
| (State or other jurisdiction of<br><br>incorporation or organization) | Commission<br><br>File Number | (I.R.S. Employer<br><br>Identification No.) |
551 Fifth Avenue, New York, New York10176
(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)) |
| --- | --- |
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.
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 |
Item 2.02. Results of Operations and Financial Condition.
Certain portions of our press release dated November 9, 2020, 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 1^st^ through 4^th^<br> and 7^th^ through 9^th^ full paragraphs, relating to results of operations for the third quarter ended September<br> 30, 2020 |
|---|---|
| ● | Portions of the 5^th^ and 6^th^ paragraphs<br>relating to results of operations for the third quarter ended September 30, 2020 |
| --- | --- |
| ● | The 10^th^ paragraph relating to balance sheet items |
| --- | --- |
| ● | The 12^th^ paragraph relating to the conference call to be held on November 10, 2020 |
| --- | --- |
| ● | The consolidated statements of income and consolidated balance sheets |
| --- | --- |
Item 7.01. Regulation FD Disclosure.
Certain portions of our press release dated November 9, 2020, 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:
| ● | The last sentence of the 5^th^ paragraph relating to 2021 new product launches |
|---|---|
| ● | Portions of 6^th^ paragraph relating to factors affecting 2021 anticipated growth |
| --- | --- |
| ● | The 11^th^ paragraph relating to 2020 and 2021 guidance |
| --- | --- |
| ● | The 14^th^ paragraph relating to forward looking information |
| --- | --- |
| ● | The balance of such press release not otherwise incorporated by reference in Item 2.02 |
| --- | --- |
Item 9.01 Financial Statements and Exhibits
.
| 99.1 | Our press release dated November 9, 2020 |
|---|
1
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 9, 2020
| Inter Parfums, Inc. | |
|---|---|
| By: | /s/ Russell Greenberg |
| Russell Greenberg, | |
| Executive Vice President | |
| and Chief Financial Officer |
2
Exhibit 99.1
FOR IMMEDIATE RELEASE
INTER PARFUMS, INC. REPORTS 2020 THIRDQUARTER RESULTS
New York, New York, November 9, 2020: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2020. Of note, the average dollar/euro exchange rate for the 2020 third quarter is 1.17 as compared to 1.11 in the third quarter of 2019, and 1.13 and 1.12 for the nine months ended September 30, 2020 and 2019, respectively.
Third Quarter 2020 Compared to ThirdQuarter 2019:
| ● | Net sales were $160.6 million, down 16.0% from $191.2 million; at comparable foreign currency exchange<br>rates, net sales declined 18.3%; |
|---|---|
| ● | Net sales by European based operations declined 9.6% to $129.7 million from $143.6 million; |
| --- | --- |
| ● | Net sales by U.S. based operations dropped 35.1% to $30.9 million from $47.6 million; |
| --- | --- |
| ● | Gross margin rose to 60.5% compared to 59.8% |
| --- | --- |
| ● | S,G&A expenses as a percentage of net sales were 41.0% compared to 40.7%; |
| --- | --- |
| ● | Operating income declined 14.4% to $31.4 million from $36.6 million; |
| --- | --- |
| ● | Operating margin was 19.5% compared to 19.2%; |
| --- | --- |
| ● | The effective income tax rate was 28.8% compared to 27.4%; |
| --- | --- |
| ● | Net income attributable to Inter Parfums, Inc. declined 20.7% to $16.5 million from $20.8 million;<br>and, |
| --- | --- |
| ● | Net income attributable to Inter Parfums, Inc. per diluted share declined 21.2% to $0.52 from $0.66. |
| --- | --- |
Thus, through the first nine months of 2020, net sales declined 33.7% to $355.0 million from $535.7 million, in the same period of the prior year. At comparable foreign currency exchange rates, net sales declined 34.1%. Net income attributable to Inter Parfums, Inc. was $23.5 million, down 54.9% from $52.1 million in the same period last year, while net income attributable to Inter Parfums, Inc. per diluted share declined 54.9% to $0.74 from $1.64.
Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, “What a difference a quarter makes. As compared to the preceding quarter, sales rallied across all of our markets, with the three largest, North America, Western Europe and Asia, achieving significant gains. As a result, when compared to the second quarter, third quarter net sales increased 224%; gross margin rose 630 basis points; our operating margin returned to a more normalized level of 19.5%; and once again, our bottom line was solidly profitable.”
Mr. Madar continued, “2020 has been a highly productive year, despite the hardships and disruptions caused by the COVID-19 pandemic. We added two new important luxury brands to our portfolio this year, MCM and Moncler, and made an equity investment in Divabox, the parent company of Origines-parfums, France’s third largest and fast growing player in the online beauty space. We also introduced a limited number of new products and brand extensions in 2020, including Coach Dreams, L’Homme Rochas, Oscar de la Renta’s Bella Essence, and Abercrombie & Fitch Authentic Night. Our 2021 new product launch schedule is far more prolific and ambitious, as are our advertising and promotional campaign plans.”
He concluded, “We are adapting to a retail environment that is in flux with online commerce offsetting much of the shortfall from brick and mortar and travel retail outlets. Our historic strengths, notably a very strong balance sheet, a rich, diverse and growing brand portfolio, a distribution network encompassing 120 countries, and a flexible and responsive supply chain, coupled with our COVID-19 defensive actions, including deferring new product launches and associated promotional expenses until 2021, keeping a tight rein on other variable expenses and suspending the quarterly cash dividend, position Inter Parfums for a resumption of top and bottom line growth as the pandemic subsides.”
| Inter Parfums, Inc.<br> November 9, 2020 | Page 2 |
| --- | --- |
Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc., stated, “For European operations, the third quarter gross profit margin was 62.4% as compared to 62.8% in last year’s third quarter with the weakened dollar responsible for the modest decline. For the current nine month period, gross margin was 62.3% which, as previously reported, factors in the second quarter assumption of a return liability for products sold by the former licensee of a brand license we entered into in 2019. In the same period last year, gross margin for European operations was 64.7%. For U.S. operations, third quarter gross profit margin was 52.5%, up from 51.0% reported for the prior year’s third quarter with the modest improvement attributable to product mix.”
Mr. Greenberg pointed out, “Cutting expenses wherever possible and appropriate has been a priority since the advent of the pandemic. Stepping on the brakes had the desired result in the third quarter as S, G & A expenses were reduced by 15.4% as compared to last year’s third quarter, and represented 41.0% of net sales, just slightly more than 40.7% in the third quarter of 2019. For European operations S, G & A expenses declined 11.4% and represented 41.3% of 2020 third quarter net sales as compared to 42.1% in last year’s third quarter. Our significantly smaller U.S. operations carry higher fixed costs that could not be leveraged as efficiently as those of our European operations with the decline in net sales. Thus for U.S. operations S, G & A expenses decreased 29.2% and represented 39.7% of net sales as compared to 36.3% in last year’s third quarter.”
Mr. Greenberg continued, “In response to the impact of the COVID-19 pandemic, most of our 2020 promotional programs, especially those for new product introductions, were postponed until 2021. In the third quarter, promotion and advertising represented 10.9% of net sales, as compared to 15.0% in last year’s third quarter. In dollars, that’s a savings of more than $11 million, bringing promotion and advertising included in S, G & A down to $17.6 million from $28.7 million in the third quarter of 2019.”
Mr. Greenberg also pointed out, “We closed the quarter with working capital of $422.1 million, including approximately $204 million in cash, cash equivalents and short-term investments, a working capital ratio of 4.5 to 1 and only $19.4 million of long-term debt which includes borrowings made in connection with our equity stake in the parent company of origines-parfums.fr.”
Guidance
Mr. Greenberg concluded, “As we reported last month, we raised our 2020 net sales guidance to between $495 million and $500 million resulting in net income attributable to Inter Parfums, Inc. per diluted share in the range of $0.80 and $0.84. Guidance assumes that the average dollar/euro exchange rate remains at current levels. In addition, we will issue our initial 2021 guidance after the market closes on Tuesday, December 1, 2020.”
Conference Call
Management will conduct a conference call to discuss financial results and business developments at 11:00 AM ET on Tuesday, November 10, 2020. Interested parties may participate in the call by dialing (201) 493-6749; please call in 10 minutes before the conference call is scheduled to begin and ask for the Inter Parfums call. The conference call will also be broadcast live over the Internet. To listen to the live call, please go to www.interparfumsinc.com and click on the Investor Relations section. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days at Inter Parfums’ website.
| Inter Parfums, Inc.<br> November 9, 2020 | Page 3 |
| --- | --- |
Founded in 1982, Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes and cosmetics as the exclusive worldwide licensee for Abercrombie & Fitch, Anna Sui, Boucheron, Coach, Dunhill, Graff, GUESS, Hollister, Jimmy Choo, Karl Lagerfeld, Kate Spade New York, MCM, Moncler, Montblanc, Oscar de la Renta, Paul Smith, Repetto, S.T. Dupont and Van Cleef & Arpels. Inter Parfums is also the owner of Lanvin fragrances and the Rochas brand. Through its global distribution network, the Company’s products are sold in over 120 countries.
Statements in this release which are not historical in nature are forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. In some cases you can identify forward-looking statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would," or similar words. You should not rely on forward-looking statements, because actual events or results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to, the risks and uncertainties discussed under the headings “Forward Looking Statements” and "Risk Factors" in Inter Parfums' annual report on Form 10-K for the fiscal year ended December 31, 2019, the Quarterly Report on Form 10-Q filed for the third quarter of 2020 and the additional 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 at Inter Parfums, Inc. | -or- | Investor Relations Counsel |
|---|---|---|
| Russell Greenberg, Exec. VP & CFO | The Equity Group Inc. | |
| (212) 983-2640 | Fred Buonocore (212) 836-9607/fbuonocore@equityny.com | |
| rgreenberg@interparfumsinc.com | Linda Latman (212) 836-9609/llatman@equityny.com | |
| www.interparfumsinc.com | www.theequitygroup.com |
See Accompanying Tables
| Inter Parfums, Inc.<br> November 9, 2020 | Page 4 |
| --- | --- |
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
| Three Months Ended<br> September 30, | Nine Months Ended<br> September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net sales | $ | 160,637 | $ | 191,227 | $ | 354,967 | $ | 535,712 | ||||
| Cost of sales | 63,439 | 76,790 | 141,883 | 204,459 | ||||||||
| Gross margin | 97,198 | 114,437 | 213,084 | 331,253 | ||||||||
| Selling, general and administrative expenses | 65,841 | 77,793 | 169,471 | 238,860 | ||||||||
| Income from operations | 31,357 | 36,644 | 43,613 | 92,393 | ||||||||
| Other expenses (income): | ||||||||||||
| Interest expense | 148 | 384 | 1,510 | 1,214 | ||||||||
| (Gain) loss on foreign currency | 891 | 121 | (76 | ) | 818 | |||||||
| Interest income | (393 | ) | (562 | ) | (2,154 | ) | (2,886 | ) | ||||
| 646 | (57 | ) | (720 | ) | (854 | ) | ||||||
| Income before income taxes | 30,711 | 36,701 | 44,333 | 93,247 | ||||||||
| Income taxes | 8,859 | 10,043 | 12,165 | 26,012 | ||||||||
| Net income | 21,852 | 26,658 | 32,168 | 67,235 | ||||||||
| Less: Net income attributable to the noncontrolling interest | 5,314 | 5,810 | 8,688 | 15,176 | ||||||||
| Net income attributable to Inter Parfums, Inc. | $ | 16,538 | $ | 20,848 | $ | 23,480 | $ | 52,059 | ||||
| Earnings per share: | ||||||||||||
| Net income attributable to Inter Parfums, Inc. common shareholders: | ||||||||||||
| Basic | $ | 0.52 | $ | 0.66 | $ | 0.74 | $ | 1.66 | ||||
| Diluted | $ | 0.52 | $ | 0.66 | $ | 0.74 | $ | 1.64 | ||||
| Weighted average number of shares outstanding: | ||||||||||||
| Basic | 31,533 | 31,452 | 31,531 | 31,444 | ||||||||
| Diluted | 31,619 | 31,676 | 31,651 | 31,681 | ||||||||
| Dividends declared per share | — | $ | 0.28 | $ | 0.33 | $ | 0.83 |
| Inter Parfums, Inc.<br> November 9, 2020 | Page 5 |
| --- | --- |
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
(Unaudited)
| December 31,<br> 2019 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 133,350 | $ | 192,417 | ||
| Short-term investments | 70,685 | 60,714 | |||
| Accounts receivable, net | 138,486 | 133,010 | |||
| Inventories | 178,852 | 167,809 | |||
| Receivables, other | 1,319 | 2,054 | |||
| Other current assets | 18,032 | 17,123 | |||
| Income taxes receivable | 624 | 169 | |||
| Total current assets | 541,348 | 573,296 | |||
| Equipment and leasehold improvements, net | 11,627 | 11,107 | |||
| Right-of-use assets, net | 25,525 | 28,359 | |||
| Trademarks, licenses and other intangible assets, net | 206,446 | 201,983 | |||
| Deferred tax assets | 9,748 | 8,004 | |||
| Other assets | 21,487 | 6,083 | |||
| Total assets | 816,181 | $ | 828,832 | ||
| LIABILITIES AND EQUITY | |||||
| Current liabilities: | |||||
| Current portion of long-term debt | 5,755 | $ | 12,326 | ||
| Current portion of lease liabilities | 4,951 | 5,356 | |||
| Accounts payable – trade | 27,321 | 54,098 | |||
| Accrued expenses | 71,770 | 96,421 | |||
| Income taxes payable | 9,450 | 5,865 | |||
| Dividends payable | — | 10,399 | |||
| Total current liabilities | 119,247 | 184,465 | |||
| Long–term debt, less current portion | 19,384 | 10,734 | |||
| Lease liabilities, less current portion | 22,289 | 24,635 | |||
| Equity: | |||||
| Inter Parfums, Inc. shareholders’ equity: | |||||
| Preferred stock, .001 par; authorized 1,000,000<br> shares; none issued | — | — | |||
| Common stock, .001 par;<br> authorized 100,000,000 shares; outstanding 31,537,558 and 31,513,018 shares at September 30, 2020 and December 31,<br> 2019, respectively | 32 | 31 | |||
| Additional paid-in capital | 73,268 | 70,664 | |||
| Retained earnings | 488,193 | 474,637 | |||
| Accumulated other comprehensive loss | (24,558 | ) | (39,853 | ) | |
| Treasury stock, at cost, 9,864,805 shares at September 30, 2020 and December 31, 2019 | (37,475 | ) | (37,475 | ) | |
| Total Inter Parfums, Inc. shareholders’ equity | 499,460 | 468,004 | |||
| Noncontrolling interest | 155,801 | 140,994 | |||
| Total equity | 655,261 | 608,998 | |||
| Total liabilities and equity | 816,181 | $ | 828,832 |
All values are in US Dollars.