FOR IMMEDIATE RELEASE
INTER PARFUMS, INC. REPORTS FIRST QUARTER RESULTS
2006 Preliminary New Product Pipeline Announced and 2005 Guidance Reaffirmed
New York, New York, May 10, 2005:Inter Parfums, Inc.(NASDAQ National Market: IPAR)today reported results for the first quarter ended March 31, 2005.
First Quarter 2005 Compared to First Quarter 2004:
- Net sales rose 22% to $71.1 million from $58.4 million; at comparable foreign currency exchange rates, net sales were up 20% for the period;
- Gross margin was 57% compared to 49%;
- S, G & A expense as a percentage of sales was 44% compared to 32%;
- Income from operations was $9.0 million, down 11% from $10.1 million;
- Net income declined 7.8% to $4.4 million from $4.8 million; and, diluted earnings per share were $0.22 compared to $0.23 per diluted share.
Jean Madar, Chairman of the Board and Chief Executive Officer, stated, "Our sales mix continues to skew more heavily toward prestige products which were up 29% over last year's first quarter and accounted for 88% of consolidated sales. Approximately 40% of the sales gain was organic stemming from the geographic rollout of BurberryBrit for Men and the continued expansion of BurberryBrit Red distribution.In addition, the first quarter also included initial sales of our new Celine fragrance,Fever. Sales generated by Nickel, our majority owned men's skin care business acquired in April 2004 and by Lanvin fragrances, whose license we acquired in July 2004, accounted for the balance of the top line growth."
He continued, "Product mix as well as an increase in our selling prices to distributors for Burberry fragrances caused our gross margin percentage to increase to 57%. As expected, higher royalties and advertising expenditures required under our new license with Burberry were primarily responsible for the increased level of S, G & A expense for the current quarter. Company wide, royalty expense aggregated $7.7 million in the current first quarter, up from $3.4 million in last year's first quarter. Similarly, promotion and advertising included in S, G & A approximated $11.1 million, up from $4.6 million in last year's first quarter."
Discussing the new product line-up for the remainder of the year, Mr. Madar noted, "A new Christian Lacroix fragrance family calledTumulte will be unveiled this summer, and before year-end, we plan to have our first Lanvin fragrance calledArpège Pour Homme on the market. For the 2005 holiday season, a limited edition BurberryBrit Gold will be launched at Burberry stores and select specialty stores in major markets."
He went on to say, "Our 2006 plans are moving forward as well. We have two global launches in development - the first is the fifth Burberry fragrance family for both men and women. The second is a new women's Lanvin fragrance. With regard to men's products, a special, limited edition BurberryBrit is also under development. In addition, we are also developing new men's scents for S.T. Dupont, Nickel and Paul Smith. We also have a Christian Lacroix fragrance for women in the works. Finally, we are formulating products and marketing strategies for an expanded cosmetics and skin care business drawing upon our existing brands."
Discussing the mass market, Mr. Madar noted, "The malaise has continued into the new year. Based upon data provided by the dollar store chains, store traffic and sales are down because budget conscious consumers have less disposable income in great part because of high gasoline prices. That, plus the sluggish economies in Mexico and Central and South America, and our preference to forego certain sales in these regions due to credit risk, are reasons for the decline in mass market sales."
Russell Greenberg, Executive Vice President & CFO, pointed out, "Our financial position remains strong. At March 31, 2005, working capital aggregated $129 million and we had a working capital ratio of almost 3 to 1. Cash and cash equivalents and short-term investments aggregated $49.0 million. In that regard, we have recently begun reclassifying investments in auction rate securities as short-term investments; they were previously classified as cash and cash equivalents. No realized or unrealized gains or losses have been incurred in connection with investments in these securities. Our accounts receivable and inventories increased 8% and 2%, respectively, from December 31, 2004, which is quite modest considering that net sales for the current first quarter was up 22% from last year first quarter and 10% compared to the fourth quarter of 2004."
2005 Guidance Reaffirmed
Management reaffirmed its prior 2005 guidance projecting net sales of approximately $280 million, a 19% increase compared with 2004. For the current year, net income is expected to approximate $15.8 million, or $0.77 per diluted share, which is nearly level with 2004's reported net income. The 2005 sales and net income figures assume the dollar remains at current levels.
Quarterly Dividend
The Company's regular quarterly cash dividend of $.04 per share will be payable on July 15, 2005 to shareholders of record on June 30, 2005.
Conference Call
The management of Inter Parfums will host a conference call at 11:00 am ET on Wednesday, May 11, 2005, to discuss first quarter results and other recent developments. Interested parties may participate by calling 706-679-3037, approximately10 minutes before the start of the call.This conference call will also be distributed live over the Internet via the Investor Relations section of the Company's web site atwww.interparfumsinc.com. To listen to the live call, please go to the web site in advance to register, and if needed, 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 the web site.
Statements in this release which are not historical in nature are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from projected results. Such factors include continuation and renewal of existing license agreements, effectiveness of sales and marketing efforts and product acceptance by consumers, dependence upon management, competition, currency fluctuation and international tariff and trade barriers and governmental regulation. Given these uncertainties, you are cautioned not to place undue reliance on the forward-looking statements.
Inter Parfums develops, manufactures and distributes prestige perfumes and cosmetics as the exclusive worldwide licensee for Burberry, S.T. Dupont, Paul Smith, Christian Lacroix, Celine, Diane von Furstenberg and Lanvin. The Company also has controlling interest in Nickel S.A., a men's skin care company. In addition, Inter Parfums is a leading producer and supplier of mass market fragrances, cosmetics and personal care products. The Company's products are sold in over 120 countries worldwide.
Contact at
| Inter Parfums, Inc.
Russell Greenberg, Exec. VP & CFO
(212) 983-2640
rgreenberg@interparfumsinc.com
www.interparfumsinc.com | or
| Investor Relations Counsel
The Equity Group Inc.
Linda Latman (212)836-9609/llatman@equityny.com
Robert Greenberg (212)836-9611/rgreenberg@equityny.com
www.theequitygroup.com |
(See Accompanying Tables)
Inter Parfums, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data) |
| | | Three Months Ended
March 31, | |
| | | | | |
| | | | | |
| Net sales | | $ 71,087 | | $ 58,392 | |
| | | | | |
| Cost of sales | | 30,510 | | 29,668 | |
| | | | | |
| Gross margin | | 40,577 | | 28,724 | |
| | | | | |
| Selling, general and administrative | | 31,563 | | 18,591 | |
| | | | | |
| Income from operations | | 9,014 | | 10,133 | |
| | | | | |
| Other expenses (income): | | | | | |
| Interest expense | | 215 | | 103 | |
| Loss on foreign currency | | 79 | | 492 | |
| Interest income | | (246) | | (232) | |
| | | | | |
| | 48 | | 363 | |
| | | | | | |
| Income before income taxes and minority interest | | 8,966 | | 9,770 | |
| | | | | | |
| Income taxes | | 3,156 | | 3,464 | |
| | | | | | |
| Income before minority interest | | 5,810 | | 6,306 | |
| | | | | | |
| Minority interest in net income of consolidated subsidiary | | 1,406 | | 1,527 | |
| | | | | | |
| Net income | | $ 4,404 | | $ 4,779 | |
| | | | | | |
| Net income per share: | | | | | |
| Basic | | $ 0.22 | | $ 0.25 | |
| Diluted | | $ 0.22 | | $ 0.23 | |
| | | | | | |
| Weighted average number of shares outstanding: | | | | | |
| Basic | | 19,701 | | 19,170 | |
| Diluted | | 20,420 | | 20,614 | |
Inter Parfums, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data) |
ASSETS |
| | March 31,
2005 | | December 31,
2004 |
| Current assets: | | | | |
| Cash and cash equivalents | | $ 30,496 | | $ 23,372 |
| Short-term investments | | 18,900 | | 17,600 |
| Account receivable, net | | 77,906 | | 75,382 |
| Inventories | | 59,592 | | 61,066 |
| Receivables, other | | 2,123 | | 2,703 |
| Other current assets | | 1,699 | | 930 |
| Income tax receivable | | 546 | | 544 |
| Deferred tax assets | | 2,671 | | 2,605 |
| | | | |
| Total current assets | | 193,933 | | 184,202 |
| | | | |
| Equipment and leasehold improvements, net | | 6,175 | | 6,448 |
| | | | | |
| Trademarks, licenses and other intangible assets, net | | 32,502 | | 34,171 |
| | | | | |
| Goodwill | | 4,889 | | 5,143 |
| | | | | |
| Other assets | | 557 | | 521 |
| | | | | |
| | | $ 238,056 | | $ 230,485 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
| Current liabilities: | | | | |
| Loans payable - banks | | $ 4,758 | | $ 748 |
| Current portion of long-term debt | | 4,137 | | 4,359 |
| Accounts payable | | 32,667 | | 30,730 |
| Accrued expenses | | 19,590 | | 15,385 |
| Income taxes payable | | 2,881 | | 2,533 |
| Dividends payable | | 807 | | 581 |
| | | | |
| Total current liabilities | | 64,840 | | 54,336 |
| | | | | |
| Long-term debt, less current portion | | 13,445 | | 15,258 |
| | | | | |
| Deferred tax liability | | 2,512 | | 2,839 |
| | | | | |
| Put options | | 756 | | 838 |
| | | | | |
| Minority interest | | 30,545 | | 30,705 |
| | | | | |
| Shareholders' equity: | | | | |
| Preferred stock, $.001 par; authorized 1,000,000 shares; none issued | | | | |
Common stock, $.001 par; authorized 100,000,000 shares;
outstanding 20,179,160 and 19,379,917 shares at March 31,
2005 and December 31, 2004, respectively | |
20 | |
19 |
| Additional paid-in capital | | 35,184 | | 35,538 |
| Retained earnings | | 104,369 | | 100,772 |
| Accumulated other comprehensive income | | 11,694 | | 16,431 |
Treasury stock, at cost, 6,302,768 and 7,064,511 common shares
at March 31, 2005 and December 31, 2004, respectively | |
(25,309)
| |
(26,251)
|
| | | | | |
| | | 125,958 | | 126,509 |
| | | | | |
| | | $ 238,056 | | $ 230,485 |
