IPAR - Earnings call transcript Q4 2018

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Operator

Greetings and welcome to Inter Parfums Fourth Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Mr. begin. may you Greenberg,

Russell Greenberg

Good full welcome year Dana. fourth our quarter and conference morning, you, to and XXXX Thank call.

we financial a We today will CEO, the and of will with our overview Chairman plans for share as format questions. then then, our discussion business, I will provide future. Madar, follow start will the and a our your results and regular some take of our Jean an call And of

for to a Gross XXXX. XXX% $XX.X Parfums, Inter XX.X%. million. were million. million. SG&A to rose $XXX.X diluted compared both heading to was $XXX.X sales European listeners further, up Inter operations based $XX.X prestige attributable XX.X% Net foreign XX.X% $X rates, Commission. XX.X% that record $X.X different and quarter attributable And income Summarizing of million, known At primarily income to million. XX.X% operations. Thus, net compared XXXX's domestic actual European are XX.X% to performance, to in our Statements conference noting. unknown intend to per from risks per final Net by When factors French to Parfums, a increased operations, discussed exchange Net do of rose will and $X.XX million, I diluted wholly-owned contain sales fragrance we sales a $X.XX up margin fragrance share based compared just net percentage include U.S.-based periods. sales from XX.X% the primarily rates, statements, XX.X%. dollar-euro to focused file XX.X%. increased share United was Risk to Inc. $X.XX. benefit proceeding to XX-K net Inc. are foreign income to quarter diluted XX% that year margin referring risks, $X.X few be million increased Parfums, our from XX.X% Inter discuss XXXX our $XXX.X million. to a European Inc. was products better-than-expected expenses as other through subsidiaries. the from products, refer the Exchange uncertainties remind the sales million finally, fourth to And States X.XX whole, sales share gross prestige versus compared Inter currency $XX.X Report sales forward-looking our currency to, talking to by XX.X% Annual our to quarter undertake comparable as Before $XXX.X attributable At subsidiary XX.X% These the a time-to-time about million. for duty, on worth comparable the Operating reports factors through in under were in we compared may whole, this and We XXXX. When in of but we $XX.X income as $XX.X my from Securities from financial net Parfums, want and are to were but rate It conducted a increased be million, from $XXX.X conducted sales discussed. and up XX.X% million SA. materially income results Net of Most owned X.XX, our results. we Interparfums to cause operations, fourth million increased of average to call Form operations to not we update net which are on no and our $XXX.X for the sales exchange to information projected discussion not per that Inc. and exchange net involve the may as rose uncertainties, helps know million year resulting to Factors items attributable $X.XX limited slight in with the Forward-Looking as to net

gross by quarter. annual addition, an business fourth by mass-market $X.X We've gained XXXX included operations two isolated be already on you’ve highlight to to our more discussed in the release, of weekend an impairment our want contributions reviewing to to but spent press XXXX rather brands I'm charge I know quarter for Since looking our relating a than there us. our sales you that from business. XXXX Form on all basis the in the do at income game-changer In legacy report annual sure our million is XX-K,

which first, to zero brand scent launched. based our our since million from which has is first is part European close gone Coach a was operations when of The $XXX XXXX to Coach,

The beginning major GUESS, a to been April second brand addition the is contributor GUESS legacy increase of has scents XXXX in XXXX in sales. the

sales a rather introduction year, meaningfully of of sales were because Another continued last scents blockbuster the established the our of with is product based several along brand flankers launch, and major point ahead not basis worth of emphasizing of but on European extensions.

full dollar profitability Moving compared for fluctuation in X.XX in the the XXXX. in margin was in for gross European our XXXX operations margin. and accounting full dollar-euro XXXX The rate XX.X% small weaker as X.XX that for XXXX. for XX.X% was year inputs, on exchange year gross average to With the in to

in we of accounted XX.X% say to in States sales that that in expenditure Such regard of to isn't XXXX For XX% as With much our resulting expenses rate XX.X% in except aggregate XXXX. points the for XX.X% XXXX, the Since we effective in under compared as United in of annual items and XX.X% U.S. in net tax as talk promotion XX.X% about have and line, to and the primarily to arena, rate license. from to lesser in XXXX. In the compared earmarked with our up than There benefited target. France. XXXX, XX.X% the improvement bottom basis expenses in reduction a XX% XXXX. margin from prestige sales SG&A non-operating was operations, in tax gross aggregated XX.X% increased extent XXXX XXXX the margin net sales to influenced these products XXX from higher more in XXXX, advertising was corporate

At investments current remains and the financial capital had Our a and extremely aggregated of aggregated working cash $XXX position working million year-end, strong. debt to $XX.X short-term ratio Long-term we Cash X. X million. equivalents million. over and including aggregated portion $XXX capital

greater XXX of diluted Inc. million, since $X.XX. Parfums, per sale guidance have of in benefit our share issued of resulting for XXXX, for Inter to initial our we the net With now attributable net look raised expectations we visibility and income

XXXX continue. As remain for the will levels. assumes current always, dollar at guidance Jean, please

Jean Madar

all Russ, you, afternoon Thank good to and you. of

recent sadness with in Before business, I moving October the the on whose name industry since giant passing to Lagerfeld, Karl want licensed of to XXXX. we fashion acknowledge the have

and our well by brands roster and new honor memory world's onto unique evoke our of promotion, that continuing great Company as year support among both e-commerce. with distribution was stature brick-and-mortar elegance through to adding his designers. and continue fragrance leading And now, product for expanding stores, his brands in with geographically, will as portfolio to We our the business. XXXX a to our

sales and our partners. and potential our reputation profits industry and among further within Our we set enhanced records

The achieved largest in year-over-year in we markets, Europe our quarter fourth As we Asia. growth especially all the North sales three we reported, Western was in regions in culminating growth sales strong in and operate. America, which

it North America, X%; Europe, Asia up For was Western and XX%. XX%;

gains Europe. for East the made and Eastern East also with Middle We sales in the X% Eastern for and Europe Middle up XX%

equates achieve X,XXX,XXX to per continued $XXX we growth, only employees, exceptional to X.X addition -- XXX million attained we In sales, productivity. in employee. which With million

we and individuals have several responsibility. positions for elevated billion several exceptional critical to As to of mark, new greater sales hires, approach established met the posts, some new prepare our $X we

We are far a years. anticipate now the to growth better position support in coming in the we

less perfume new packaging the as flankers our I original, our hundreds catalysts world thousands play to global also and in design thoughts extensions a many share is of the and expensive mega In proceed easier of caps and want No fragrance in of our they launch brand the call keep a and flanker and It produce. launches schedule, can different since both [ph] we blockbuster, years to I two dollars are well. to up but the course, and time. with of better critical take it on some Before, graphic flankers, where brand, the trends bottle business. bottles as relevant over extensions. sales and for a huge product launch role highlights generally doubt Flankers fragrance, brand importance to goes business, and of similar have the that

or may than give opportunity there rule, risk may successful scratch Flankers less the with successful. brand. a on the be As revive rather formula, on is us doubling once new which a down starting from popular not the to also fragrance associated

the have the rollout launches we So, should move sales January energize now, in brand. focus of a pipeline, initiated product XXXX. on brand and in the to our many, in Explorer, we our fragrance, global which Montblanc on largest new with new

expectations. newer The year, the Blossom, Later men's a way Jimmy along are interpretations brand, Jimmy in Choo first the of results above new have line with our for we Choo debuting franchise. the retail women’s and entirely Illicit polish looking we lipsticks price, will XXXX, brand an and L'eau. beauty plus into fragrance to expand high at In be the with nail new

sales scents are XXXX the and floral we we in major to fragrance prepare established So, brand as women's XXXX. for launch Coach, second relying for sustain on in flanker

and fragrance For Girl called A for Capri, the Lanvin, debut which a we in launched women, summer. in new will

got acquired men’s brand. we've we out, rolling us Rochas, the developed the first the For by Moustache since line scent

pleased the distribution is early have countries women’s for part scents brand where plan fall Noir, we being rollout will a entirely most the also the XX new will year, men's for Mousseline. called our with Spain. and Rochas women GUESS our new With October, in about and fallout September will this begin that may distribution by September, fall. start which blockbuster third XXXX U.S., introduce in regard further scent into a to cache. today. unveil GUESS, but Seductive second We introduce in for a followed the are international the we the Rochas fragrance Los also the expand could year, extension. in in XXXX, it with existing Rochas Historically France But brand also of we XXXX, the pillars, Angeles sold limited Then, interpretation to fragrances after. designer developing very distribution brand. new starting the to of spring The an to for late when We new I'm in report later will domestic year are domestic product international a we upscale was coming

flanker, for for a for other the fragrance. debut. called called the have Fantasia addition London we major a with by Skies. Abercrombie & launched new yearend. In called we after UK as Fitch, global new [Ph] throughout we Fantasia launch new a through new and XXXX, are in we Signature will in planned but concentrated the of fragrance next XXXX a Anna family, as an Anna in launching that rollout a strong April have duo Harrah's are be next following Sui, running For fragrances our For exclusive Dunhill, following starting This Asia in followed Authentic. XXXX, And we month, speak do a [ph] a collection will Sui in has Sui Mermaid she has great Anna the brand and success also year.

a follow in and will are distribution after. We launching UK month the first global

our to date for you very or me our launch. to Lily regards newest we With for Graff like Aldridge. are early Let going debut XXXX six up Graff, our revised It XXXX, looks sense now late create and on to brands, is timetable bring this collection.

is We for finally, are hotel travel Aldridge supplying with with four with also Lily the in supermodel’s moving geographic important first with customers’ discussions markets each and the givebacks. associated scents, in the program exquisite forward airlines life. Graff class about premier amenities And

remaining of first year Lily early table Our two the debut and XXXX. then to time scent the second anticipates this November in the in in September,

we operator, for floor now, open So, questions. the can

Operator

the from with line Please your Instructions] Linda question. D.A. Bolton Our Weiser proceed with [Operator of comes question first Davidson.

Linda Bolton Weiser

Hi.

I ask was euro. the just about was bit and I was yet even year-over-year weak thought a you i.e. it the can more less flat guess, guess we it was and So, currency a of negative, the comparison gross margin? little -- sort little I than had

I'm have just that margin? think, the it I your didn’t gross wouldn’t margin but European in you said more. did it why So, whole the segment, helped gross wondering affect

up So, touch more margin why year-over-year? margin. maybe you of the to gross could trying I'm on figure U.S. the sort just wasn’t gross out

Jean Madar

This Russ. a question for is

Russell Greenberg

rate exchange a gross and the X.XX, negative a the reflecting weaker full compared have slightly compared margin. normally that effect for I as as to in as year -- would dollar Well, indicated, was to X.XX XXXX, on

exchange come However, positive. a U.S. in that and that's -- sold increase which overall is in our business. that mitigated And up sold also side margin key it direction that in for from effect significant the products rate direction license, -- of The the U.S. in flipped U.S. more was actually is to the XX.X% increase gross European saw are XXXX the actually other under primarily moving. at that rate though real margin XX.X% products was under the the was due exchange related the from that prestige type business The XXXX. our where the quarter, is side on negative bit our little currency to

Overall, of very really from is gross each XX.X. companywide of on decline those to up. a have in counter-effects the XX.X, small margin where basis, ended you we So, down a

Jean Madar

add in Do gross for And I improve the agree, XXXX Russ? basis U.S., margin you continue XXX would like XXX, to that maybe points. to at we'll least our by

Russell Greenberg

Yes. year. I this will points And products. higher should improve sales more we of XXX continue, prestige move towards the by that as that again, margin basis That almost exactly think

Linda Bolton Weiser

billion? thinking to Okay. are Can can heard goal. What get you you billion mentioned as in $X ask, guess $X a can sales Thank I the timeframe I I first say also of you. That's that's ask time a you guess, a helpful. that. kind you I you --

Jean Madar

brand. to we that the I a going portfolio, in think Look, -- potential knew are from ask that that be $XXX to were look we two million close GUESS -- you at have when now million that. have three now the to brands brand. has three today $XXX are We you years to

if now from going I put. So, it's years will to four a is know now, years goal. don't it's this three I that be timeframe but from the

Linda Bolton Weiser

ask? I Your And better can said also you Montblanc doing already I think Explorer, comments than expected. about

double-digit is quarter So, is year over be that first the possible, up it revenue could possible? year,

Jean Madar

I already of months don't very, we could are a look know strong into And we the first what comment, we quarter can but two say, quarter. we at XXXX. if can very first

Russell Greenberg

thing add last The up only XX%. first about year's that, quarter Yes. I would was to

between growing be one of Let's little X% keep in X%. mind Could increase XXXX. QX QX in that bit and an the had better, guidance of we was a highest quarters implies the

strong going know to we'll in fact look the that But it, it's we pretty that get to think and last think, we the any I and Whether Explorer double-digit. of we yes, we very year So, first for sales yet. the GUESS, close quarter. have the could or could exceed quarter first at not second -- that with have don't launch we with didn’t

Operator

next line Our James. the Altobello Joe Raymond question from question. comes your with proceed of with Please

Joe Altobello

January it go to this want sounds just to year, revision I like pretty the strong. in and guidance February back and the early the guidance were

on did launches, Montblanc So outlook? was trying you the insight two Explorer were Was that it that in the broad-based strength? based little year the just particularly into like a for get more curious, confidence you months strong? first saw it more new the see So, a full-year geographies you what gave to of brand, just

Jean Madar

I'll start, Joe.

combination of it's a think few things. a different I

very very, market to strong continues our also strong. we on has very for been products and ended note. all, the XXXX a of year First The be

to probably So, on the Montblanc why that seeing decided the will bit our which we on the and a we’re guidance. results initial early significant into results seeing But that what one increase role, clearly, the so is year's that as be played launch, also playing year. little is decision guidance raise as that also the to in launches, far a of the the we’re biggest

Joe Altobello

Okay, helpful. secondly… that’s And then, maybe

Jean Madar

whole quite we Joe. the and may, this gave but first I stores. we November level guess, lot that sell-through see If traveled, I store guidance level January, the distributor low. And and what I at see a the is we a inventory December at add we guidance, and will traveled then that Company in

large of request large -- we in February. have from our January and distributors We have purchasing

are that's because stay slowly we more conservative. confident, why are we and So, much to increasing have we

very stores -- lot that's are in a position. Asia a that in analysts very ourselves is guidance. are looking We good know in why increased good to general, little are of and shape. I have we at we the with Asia we But a but at however by not nervous nervous checked we all.

We grow will in continue to Asia. double-digit

the which the Our Montblanc. Explorer, great for franchise sales Montblanc in be are of Europe looking will of because third also launch

to normal So, was completely honestly, the raise it guidance.

Joe Altobello

then, you. it caused what's you up Okay, What Russ. see the what are XQ assuming tax secondly, follow-ups expense understand. in And around ‘XX? expect that And it should ‘XX. your bounced Thank a we then, I jumped One, two to like quick guys looks for ‘XX? for lot maybe rate and for from XQ.

Russell Greenberg

far respect wasn't tax that rate, too was much rate unusual, to as as tax XXXX. there really into going the With the

I and around So, balance sheet. at little fairly been it, you case cash significant would and in the interest effective have probably think that once by From the exchange year. interest little investments throughout equivalents with be do we have what XX.X%. We XXXX the the we rate short-term standpoint, that in should amount rates came consistent have on rising expect missed future. number again, an And a of in in cash our

about overall of don’t But really was think full to that’s significant. greater year, the anything I see on line million. the that’s a return We all $X interest it’s up been for that that able some -- have cash. And

Operator

Please question. the line Wissink question Steph Our with proceed comes your Jefferies. of next with from

Steph Wissink

Montblanc major continued the see to of are just continuing your a curious you the without saw of on core underlying both prior strength the launches. if brands, launches in lifecycle XXXX. and you launches from grow talk bit question to of any product some can just follow-up I'm We years? little about lifecycle A if core in

Jean Madar

of taking launches the the the think that able great major negative we our is Montblanc. without business of not good It new that very have are will any launch. means a any lines, the share. see and not of The grow. in Montblanc on year buster reaching XXXX positioning that It are new impact had do news were cannibalization in specifically We to that block lines. And means we new the existing the the products impact an new Montblanc, -- market do we

and said times, Montblanc; we the in it’s on. careful case So, adding we what that our our sales the portfolio replacing. We we a And call Coach. it’s launched as case on I not the it’s very business, in when many continue sure the build to are launch is it’s total Rochas; which on an we it’s to on replace flanker, make the Coach just do not -- extension, the products to case Floral, we that

very are signs very, these us. So, positive for

Steph Wissink

if SG&A. one the on And for Russ, you, just could, I

nice and to with little you some Is you both year. your starting the talk with of in quarter core on find the the leverage, you of expense had seeing are element flankers? either of You that a I'm some marketing are some your there launches selling efficiency an could wondering what particular. bit if

Russell Greenberg

single also transparent to within A&P we’ve respect think with that probably is very I and biggest again, pretty which -- and the line the SG&A. open Overall, been consistent spend,

Even of almost to are really we That’s for. sales to at to greater that to we to mentioned continue a the came up that we towards though in been around All plan from a both targeting bit items in the dollars that XX%. that were going. Parfums This spend we’ve is and operating the many going we margins as Inter ‘XX, finally were where game than that up means gotten little add end that we we XXXX. for XX% add years. has within reached many, point we Other started A&P the momentum opening ended As expected. the XXXX expected year, target targeted remarks, keep many, SG&A, exactly really an

goal to as expand to is Our if it. date can't going on be But, I our goal course to a grow XX%. of is of can we we ours a next that top continue see it perhaps to line. pin target

Operator

comes Please BWS [Operator Financial. question Instructions] question. proceed the Hamed next with with Our from of your line Khorsand

Hamed Khorsand

Hi.

ask just demand item cannibalizing new this off, that So, I Explorer. is consumer you're you first Montblanc want brand priced built seeing? this any in about it's because Is of activity higher that to your a or

Jean Madar

all. before, As is say reaching would consumer. I at different said I cannibalization there We're a no

this didn’t is Montblanc two major a for fragrance -- are for have a We now. us. launch years new

just lot Europe is The space, the has is seeing been -- in the market. reports expected of the are from we which the right distribution than giving that great or So, and in higher much East, in good U.S. some now, expected. some news traveling I'm are or it is us got which the us We giving Middle trade numbers. either a Free, in Duty

the that elevated product price the think we an Montblanc. has right So, point, all of it cache and at it's is the product

could to quarter. am So, wait thought XXXX, -- we we the it this it -- thought for very end waited We XXXX to launched was better first sorry. product wait but better of I in was have we

this add Russ, you do we'll like something? the this so, have And year. want year full to

Russell Greenberg

hit you think I No, it.

I think their they potential that expecting. for is and to the success products the that the minimal bodes product new new to we things other is brand. main Parfums what we is standpoint the see of tries look brand the that really when the and do cannibalization that attract sell for the key we customers One capture try to brands consumers that We to of doing and well each try that what of to study new to to have Inter brand. create And the we're that the brand, from

Hamed Khorsand

is now that far far guys And else was inventory then, initial going you was conservatism, several new happen What there Russ, because on. going I is that that's as level and concerned highlighting the know is driving there not earlier. as just as uptick? you this demand drove were you launches to Is touched were to starting guidance something this? distribution, But, the what as it happen or thinking low on

Russell Greenberg

think, continue relatively particular and will Inter with been it. be to in always variables and guidance. being of I anything the to There driving rate Parfums in are don't lot conservative exchange is always there's respect with that's always our connection this, is one. has a

a coming very, are was successful year with growth very that line a license top We new off that year activity, in adding XXXX. the to had we

with if we monitor So, a at to the as and combination And And, that to therefore, looking really individual us. guidance guidance in variables. is those business comfortable that a the the It's initial the we have making business whole, looking our given. we've the for think we we raised continue today, looking decision raise And we will I we business, necessary. be, the deem of don't our need very future. the looking is at will input felt to think environment, But, stronger. continue there's extent the at guidance And any the at that times.

Hamed Khorsand

increasing, the it amount spend then, And you your increasing? of these release Okay. to all advertising though stay the target far could on or as of are and as is given going dollar finally, product the decline, new even scope guys revenue XX%

Jean Madar

our to growing, to for insurance spend customers, try I think, it's We to to dollars. future. keep new get money to our need spend these the improve very is market important sales This share. of to kind

definitely number. more do is the want XX% order profit. in decrease to this We So, not show to right it

We our budget. more will sell not we decrease we advertising show if profit if more,

Russell Greenberg

a from also was is that ago. will number years what add XX% that just I Yes. up just XX%, few

And increased solid, So, is at XX% a the it, this And all; to level increasing the at agree time, continue it. I But, tend to market. Jean evaluate moving at evaluate it as think, I don’t that now it needs pretty we XXXX. us it’s we’ll to I into see decreasing to that we have have with be. where

Operator

turn back gentlemen, Ladies session. remarks. to like Greenberg end the of I closing And and the we call to for reached have would Russell question-and-answer the

Russell Greenberg

Dana. again, you, Thank

be that Before I Citi be on be May And in Conference at questions, at like you presenting Thank Chicago. all signing D.A. for on XXth, call. will Thank at And will Staples off, then, as will to June Access in very you Day XXth, in you just And the New I our please tuning the always, further I conference much. know a office. if would the XXth, on you my Consumer May Conference contact Davidson York. great Jeffries Consumer into have I day. Nantucket. Have Consumer

Operator

concludes This today's conference.

your time. lines You may this disconnect for at you Thank your participation.

Inter Parfums (IPAR) 4 Mar 192018 Q4 Earnings call transcript