Form 8-K INTER PARFUMS INC For: Nov 09

 

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, 2015

 

Inter Parfums, Inc.

(Exact name of registrant as specified in its charter)

  

Delaware (State or other jurisdiction of incorporation or organization)

0-16469 Commission File Number

13-3275609 (I.R.S. Employer Identification No.)

 

551 Fifth Avenue, New York, New York 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))

 

 

Item 2.02. Results of Operations and Financial Condition.

 

Certain portions of our press release dated November 9, 2015, 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 5^th and 7^th paragraphs relating to income and expense for the third quarter and the nine months ended September 30, 2015

 

·           The 8^th paragraph relating balance sheet items

 

·           The 11^th paragraph relating to the conference call to be held on November 10, 2015

 

·           The consolidated statements of income and consolidated balance sheets.

 

Item 7.01. Regulation FD Disclosure.

 

Certain portions of our press release dated November 9, 2015, 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 6^th paragraph relating to our recent licensing agreements and acquistion of the Rochas brand as catalysts for future growth, and plans to report initial 2016 guidance

 

·           The 9^th paragraph relating to 2015 guidance

 

·           The 13^th paragraph relating to forward looking information

 

·           The balance of such press release not otherwise incorporated by reference in Item 2.02 or Item 8.01.

 

Item 8.01. Other Events. 

 

The 10^th paragraph of our press release dated November 9, 2015 relating to payment of quarterly dividends is incorporated by reference herein.

 

Item 9.01 Financial Statements and Exhibits.

 

99.1 Our press release dated November 9, 2015.

 

 

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, 2015

	Inter Parfums, Inc.
	By:	/s/ Russell Greenberg
	Russell Greenberg, Executive Vice President
	and Chief Financial Officer

 

 

 

Exhibit 99.1

 

 

 

FOR IMMEDIATE RELEASE

 

INTER PARFUMS, INC. REPORTS 2015 THIRD QUARTER RESULTS

 

Third Quarter Diluted EPS Up 28% to $0.46 from $0.36

 

New York, New York, November 9, 2015: Inter Parfums, Inc. (NASDAQ GS: IPAR) today reported results for the third quarter ended September 30, 2015.

 

Third Quarter 2015 Compared to Third Quarter 2014:

·

Net sales were $138.9 million, up 3.5% compared to $134.2 million; at comparable foreign currency exchange rates, net sales increased 11.4%;

·

Sales by European based operations rose 6.5% to $110.1 million from $103.4 million; at comparable foreign currency exchange rates, net sales increased 16.8%;

·

U.S. based operations generated net sales of $28.8 million, down 6.5% compared to $30.8 million;

·

Gross margin was 61.8% of net sales compared to 56.1%;

·

S,G&A expense as a percentage of net sales was 41.9% compared to 42.2%;

·

Operating income rose 48% to $27.6 million compared to $18.7 million;

·

Net income attributable to Inter Parfums, Inc. rose 28% to $14.2 million or $0.46 per diluted share, compared to $11.1 million or $0.36 per diluted share.

 

Jean Madar, Chairman & CEO of Inter Parfums, Inc. noted, “Despite the 16% depreciation of the euro versus the dollar from last year’s third quarter coupled with negative market conditions in China, Russia, and Brazil, consolidated net sales improved 3.5% or 11.4% at comparable foreign currency exchange rates. As we reported last month, European based operations achieved a 6.5% increase in third quarter net sales, equating to a 16.8% increase at comparable foreign currency exchange rates, which was slightly offset by the 6.5% decline in third quarter U.S. based sales.”

 

Discussing European based operations, Mr. Madar noted, “For the first nine months of 2015, net sales in local currency for our two largest brands, Montblanc and Jimmy Choo were up 6% and 51%, respectively, driven by a combination of new product introductions and the staying power of more established scents. Lanvin, the last of our top three brands, had a 1% decline in local currency brand sales, which are particularly sensitive to the state of Russia’s economy. Among our mid-sized brands, we had good performances by Boucheron and Paul Smith fragrances, where local currency sales were up 26% and 18%, respectively, fueled by new product launches. By contrast, last year’s first half launch and rollout of the Karl Lagerfeld fragrance duo made for a challenging comparison as year-to-date sales were down 45% in local currency.”

 

On the subject of year-to-date U.S. based operations, Mr. Madar pointed out, “The 3.3% increase in net sales reflects 50% and 35% gains by Dunhill and Oscar de la Renta fragrances compared to the first nine months of 2014, offset by declines in other brands, most notably Anna Sui and its nearly 30% drop in brand sales.”

 

Mr. Madar closed by saying, “The licensing agreements signed over the past twelve months with Abercrombie & Fitch, Hollister and Coach, and our acquisition of the Rochas brand, are all important catalysts for future growth. As we previously announced, we plan to report our initial 2016 sales and earnings guidance next week on November 17^th.”

 

  

Discussing factors impacting profitability, Russell Greenberg, Executive Vice President and CFO of Inter Parfums, Inc. stated, “Our consolidated third quarter gross profit margin of 61.8% rose from 56.1% in last year’s third quarter. Due to the strength of the U.S. dollar against the euro and its positive impact on the profitability of our European operations, the gross profit margin for our European operations was 64.8%, up 610 basis points from the third quarter of 2014. As we have reported, nearly 50% of our European operations’ sales are denominated in dollars, while most of our costs are incurred in euro. During the third quarter of 2015, the average dollar/euro exchange rate was 1.11, a 16% strengthening of the dollar as compared to 1.33 in the third quarter of 2014. Gross margin for our U.S. operations was 50.3%, up 290 basis points from the third quarter of 2014, driven by a favorable mix shift towards newer fragrances from our prestige brands such as Oscar de la Renta and Dunhill. Selling, general and administrative expenses as a percentage of net sales were relatively flat compared to the prior year quarter, reflecting increased absorption of fixed costs in our European operations resulting from the higher sales level during the quarter.”

 

Mr. Greenberg pointed out, “We ended the third quarter with working capital of $353 million, including approximately $215 million in cash, cash equivalents and short-term investments, and $84.6 million of long-term debt relating to the term loan we used to finance the Rochas acquisition.”

 

2015 Guidance

Mr. Greenberg concluded by saying, “We continue to expect net sales to be in the range of $460 million to $470 million, resulting in net income attributable to Inter Parfums, Inc. of $0.95 to $1.00 per diluted share. Our current guidance factors in negative market conditions in China, Russia and Brazil that have prevailed throughout this year. As always, our guidance assumes the dollar remains at current levels.”

 

Dividend

The Company’s regular quarterly cash dividend of $0.13 per share will be paid on January 15, 2016 to shareholders of record on December 31, 2015.

 

Conference Call

Management will conduct a conference call on Tuesday, November 10, 2015. 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. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. 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. We suggest listeners use Microsoft Explorer as their browser. 

 

  

In the more than 30 years since its founding, Inter Parfums, Inc. has been selected as the fragrance and beauty partner for a growing list of brands that include Abercrombie & Fitch, Agent Provocateur, Anna Sui, Balmain, Banana Republic, bebe, Boucheron, Coach, Dunhill, Hollister, Jimmy Choo, Karl Lagerfeld, Montblanc, Oscar de la Renta, Paul Smith, Repetto, Shanghai Tang, S.T. Dupont and Van Cleef & Arpels. We also own the Rochas brand as well as the Lanvin brand name for our class of trade. Inter Parfums is known for innovation, quality and its ability to capture the genetic code of each brand in the products it develops, manufactures and distributes in over 100 countries worldwide.

 

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, 2014 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 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/[email protected]
[email protected]				Linda Latman (212) 836-9609/[email protected]
www.interparfumsinc.com				www.theequitygroup.com

  

See Accompanying Tables

 

 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

(Unaudited)

  

		Three Months Ended September 30,								Nine Months Ended September 30,
		2015				2014				2015				2014
Net sales		$	138,944			$	134,206			$	350,214			$	374,129
Cost of sales			53,118				58,878				136,453				161,455
Gross margin			85,826				75,328				213,761				212,674
Selling, general and administrative expenses			58,188				56,647				156,815				163,720
Income from operations			27,638				18,681				56,946				48,954
Other expenses (income):
Interest expense			1,041				554				1,811				1,402
(Gain) loss on foreign currency			(336	)			(1,129	)			1,751				(1,057	)
Interest income			(857	)			(915	)			(2,829	)			(2,974	)
			(152	)			(1,490	)			733				(2,629	)
Income before income taxes			27,790				20,171				56,213				51,583
Income taxes			9,156				6,407				18,754				18,003
Net income			18,634				13,764				37,459				33,580
Less:  Net income attributable to the noncontrolling interest			4,414				2,651				8,881				7,465
Net income attributable to Inter Parfums, Inc.		$	14,220			$	11,113			$	28,578			$	26,115
Earnings per share:
Net income attributable to Inter Parfums, Inc. common shareholders:
Basic		$	0.46			$	0.36			$	0.92			$	0.84
Diluted		$	0.46			$	0.36			$	0.92			$	0.84
Weighted average number of shares outstanding:
Basic			31,005				30,941				30,991				30,927
Diluted			31,098				31,054				31,092				31,060
Dividends declared per share		$	0.13			$	0.12			$	0.39			$	0.36

  

 

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

(Unaudited)

 

ASSETS
		September 30, 2015				December 31, 2014
Current assets:
Cash and cash equivalents		$	124,529			$	90,138
Short-term investments			90,219				190,152
Accounts receivable, net			130,244				90,124
Inventories			106,991				102,326
Receivables, other			3,445				1,542
Other current assets			5,301				4,504
Income tax receivable			51				929
Deferred tax assets			9,212				6,848
Total current assets			469,992				486,563
Equipment and leasehold improvements, net			8,712				9,187
Trademarks, licenses and other intangible assets, net			207,656				98,531
Other assets			8,543				10,225
Total assets		$	694,903			$	604,506
LIABILITIES AND EQUITY
Current liabilities:
Loans payable – banks		$	--			$	298
Current portion of  long-term debt			21,975				--
Accounts payable - trade			39,322				46,646
Accrued expenses			42,530				49,194
Income taxes payable			9,186				3,773
Dividends payable			4,031				3,717
Total current liabilities			117,044				103,628
Long-term debt, less current portion			84,562				--
Deferred tax liability			4,339				2,154
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 31,005,208 and 30,977,293 shares at September 30, 2015 and December 31, 2014, respectively			31				31
Additional paid-in capital			61,235				60,200
Retained earnings			390,610				374,121
Accumulated other comprehensive (loss)			(39,915	)			(15,823	)
Treasury stock, at cost, 9,897,995 common shares at September 30, 2015 and December 31, 2014, respectively			(36,464	)			(36,464	)
Total Inter Parfums, Inc. shareholders’ equity			375,497				382,065
Noncontrolling interest			113,461				116,659
Total equity			488,958				498,724
Total liabilities and equity		$	694,903			$	604,506

 

 

 

 

 

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