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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

 

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2024.

 

OR

 

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___________to ________.

 

Commission File No. 0-16469

 

INTERPARFUMS, INC.

 (Exact name of registrant as specified in its charter)

 

Delaware   13-3275609
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

551 Fifth Avenue, New York, New York 10176
(Address of Principal Executive Offices)          (Zip Code)

 

(212) 983-2640
(Registrants telephone number, including area code)

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act).

 

Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐
  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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

At November 6, 2024, there were 32,030,280 shares of common stock, par value $.001 per share, outstanding.






INTERPARFUMS, INC. AND SUBSIDIARIES

 

 

Item 1. Financial Statements

 

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. We have condensed such financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, such financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America. In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued by filing with the SEC. These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2023, included in our annual report filed on Form 10-K.

 

The results of operations for the nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the entire fiscal year.

 

Page 1

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

 (In thousands except share and per share data)

 (Unaudited)

                 
ASSETS







    September 30, 2024     December 31, 2023  
Current assets:                
Cash and cash equivalents   $ 78,419     $ 88,462  
Short-term investments     78,783       94,304  
Accounts receivable, net     354,175       247,240  
Inventories     412,758       371,859  
Receivables, other     4,984       7,012  
Other current assets     26,788       29,458  
Income taxes receivable     533       691  
Total current assets     956,440       839,026  
Property, equipment and leasehold improvements, net     166,435       169,222  
Right-of-use assets, net     25,471       28,613  
Trademarks, licenses and other intangible assets, net     290,864       296,356  
Deferred tax assets     19,742       14,545  
Other assets     21,648       21,567  
Total assets   $ 1,480,600     $ 1,369,329  
                 
LIABILITIES AND EQUITY                
Current liabilities:                
Loans payable - banks   $ 8,957     $ 4,420  
Current portion of long-term debt     44,538       29,587  
Current portion of lease liabilities     6,189       5,951  
Accounts payable – trade     96,578       97,409  
Accrued expenses     166,156       178,880  
Income taxes payable     17,164       8,498  
Total current liabilities     339,582       324,745  
Long–term debt, less current portion     134,585       127,897  
Lease liabilities, less current portion     21,304       24,517  
                 
Equity:                
Interparfums, Inc. shareholders’ equity:                
Preferred stock, $.001 par; authorized 1,000,000 shares; none issued     —       —  
Common stock, $.001 par; authorized 100,000,000 shares; outstanding 32,029,580 and 32,004,660 shares at September 30, 2024 and December 31, 2023, respectively     32       32  
Additional paid-in capital     101,123       98,565  
Retained earnings     762,826       693,848  
Accumulated other comprehensive loss     (32,641 )     (40,188 )
Treasury stock, at cost, 9,981,665 and 9,981,665 shares at September 30, 2024 and December 31, 2023, respectively     (52,864 )     (52,864 )
Total Interparfums, Inc. shareholders’ equity     778,476       699,393  
Noncontrolling interest     206,653       192,777  
Total equity     985,129       892,170  
Total liabilities and equity   $ 1,480,600     $ 1,369,329  

 

See notes to consolidated financial statements.


Page 2

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

(In thousands except per share data)

 (Unaudited)

                 









Three Months Ended

Nine Months Ended
    September 30,  
September 30,
    2024     2023  
2024

2023
             







Net sales   $ 424,629     $ 367,969  
$ 1,090,821

$ 988,936
                 







Cost of sales     153,469       132,962  

396,519


362,568
                 







Gross margin     271,160       235,007  

694,302


626,368
                 







Selling, general and administrative expenses     165,166       147,805  

455,506


393,866
                 







Income from operations     105,994       87,202  

238,796


232,502
                 







Other expenses (income):                







Interest expense     1,978       2,397  

5,726


7,030
Loss (gain) on foreign currency     3,355     (669 )

3,085

(656 )
Interest and investment loss (income)     254     (1,062 )

(1,690 )

(8,421 )
Other loss (income)     1     (77 )

(35 )

(125 )
                 







Nonoperating Income (Expense)     5,588     589

7,086


(2,172 )
                 







Income before income taxes     100,406       86,613  

231,710


234,674
                 







Income taxes     23,571       20,493  

54,974


55,128
                 







Net income     76,835       66,120  

176,736


179,546
                 







Less:  Net income attributable to the noncontrolling interest     14,576       12,906  

36,606


37,312
                 







Net income attributable to Interparfums, Inc.   $ 62,259     $ 53,214  
$ 140,130

$ 142,234
                 







Earnings per share:                







                 







Net income attributable to Interparfums, Inc. common shareholders:                







Basic   $ 1.94     $ 1.66  
$ 4.37

$ 4.44
Diluted   $ 1.93     $ 1.66  
$ 4.34

$ 4.42
                 







Weighted average number of shares outstanding:                 







Basic     32,026       31,976  

32,030


32,000
Diluted     32,266       32,124  

32,266


32,149
                 







Dividends declared per share   $ 0.750     $ 0.625  
$ 2.250

$ 1.875

 

See notes to consolidated financial statements.

 

Page 3

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

 (In thousands)

(Unaudited)

                 









Three Months Ended

Nine Months Ended
    September 30,  
September 30,
    2024     2023  
2024

2023
Comprehensive income:                







                 







Net income   $ 76,835     $ 66,120  
$ 176,736

$ 179,546
                 







Other comprehensive income:                







                 







Net derivative instrument loss, net of tax     (239 )     (363 )

(1,411 )

(4,606 )
                 







Transfer from OCI into earnings     —     —  

(64 )

1,709
                 







Translation adjustments, net of tax      31,385     (15,692 )

10,891

(2,657 )
                 







Comprehensive income     107,981       50,065  

186,152


173,992
                 







Comprehensive income attributable to the noncontrolling interests:                







                 







Net income     14,576       12,906  

36,606


37,312
                 







Other comprehensive income:                







                 







Net derivative instrument loss, net of tax     (66 )     (100 )

(388 )

(327 )
                 







Translation adjustments, net of tax     8,989     (4,892 )

2,257

(1,481 )
                 







Comprehensive income attributable to the noncontrolling interests     23,499       7,914  

38,475


35,504
                 







Comprehensive income attributable to Interparfums, Inc.   $ 84,482     $ 42,151  
$ 147,677

$ 138,488


See notes to consolidated financial statements.


Page 4

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

 (In thousands)

(Unaudited) 

 

 
Three Months Ended   Nine Months Ended  


September 30, September 30,
    2024 2023   2024     2023  
 







           
Common stock, beginning and end of period
$ 32

$ 32
  $ 32     $ 32  


































Additional paid-in capital, beginning of period

100,505


95,984
    98,565       90,186  
Shares issued upon exercise of stock options

359


332
    1,729       5,523  
Share-based compensation

259


311
    780       935  
Transfer of subsidiary shares purchased

—

(875 )     49       (892 ) 
Additional paid-in capital, end of period

101,123


95,752
    101,123       95,752  
 







               
Retained earnings, beginning of period

724,268


669,688
    693,848       620,095  
Net income

62,259


53,214
    140,130       142,234  
Dividends

(24,022 )

(20,038 )     (71,985 )     (60,058 )
Share-based compensation

321


227
    833       820  
Retained earnings, end of period

762,826


703,091
    762,826       703,091  
 







               
Accumulated other comprehensive loss, beginning of period

(54,864 )

(48,739 )     (40,188 )     (56,056 )
Foreign currency translation adjustment, net of tax

22,396

(10,800 )     8,634     (1,176 )
Transfer from other comprehensive income into earnings

—

—
    (64 )     1,709  
Net derivative instrument loss, net of tax

(173 )

(263 )     (1,023 )     (4,279 )
Accumulated other comprehensive loss, end of period

(32,641 )

(59,802 )     (32,641 )     (59,802 )
 







               
Treasury stock, beginning of period

(52,864 )

(48,764 )     (52,864 )     (37,475 )
Shares repurchased

—


—     —       (11,289 )
Treasury stock, end of period

(52,864 )

(48,764 )     (52,864 )     (48,764 )
 







               
Noncontrolling interest, beginning of period

184,129


178,733
    192,777       171,364  
Net income

14,576


12,906
    36,606       37,312  
Foreign currency translation adjustment, net of tax

8,989

(4,892 )     2,257     (1,481 )
Net derivative instrument loss, net of tax

(66 )

(100 )     (388 )     (327 )
Share-based compensation

47

36
    179       133  
Transfer of subsidiary shares purchased

—


(125 )     (49 )     (142 )
Dividends

(1,022 )

—     (24,729 )     (20,301 )
Noncontrolling interest, end of period

206,653


186,558
    206,653       186,558  
 







               

















Total equity
$ 985,129

$ 876,867
  $ 985,129     $ 876,867  

 

See notes to consolidated financial statements.


Page 5

INTERPARFUMS, INC. AND SUBSIDIARIES 

(In thousands)

(Unaudited)

    Nine Months Ended  


September 30,
    2024     2023  
Cash flows from operating activities:                
Net income   $ 176,736     $ 179,546  
Adjustments to reconcile net income to net cash used in operating activities:                
Depreciation and amortization     18,201       12,781  
Provision for doubtful accounts     613     (560 )
Noncash stock compensation     1,768       1,887  
Share of income of equity investment     (109 )     (125 )
Noncash lease expense     4,533       4,163  
Deferred tax provision     (4,909 )     (5,075 )
Change in fair value of derivatives     (153 )     740  
Changes in:                
Accounts receivable     (102,576 )     (96,076 )
Inventories     (35,237 )     (76,786 )
Other assets     3,770     3,077
Operating lease liabilities     (4,378 )     (4,044 )
Accounts payable and accrued expenses     (17,571 )     (10,919 )
Income taxes, net     8,993     15,669  
                 
Net cash provided by operating activities     49,681     24,278
                 
Cash flows from investing activities:                
Purchases of short-term investments     (146,868 )     (145,427 )
Proceeds from sale of short-term investments     162,176       192,568  
Purchases of property, equipment and leasehold improvements     (2,889 )     (4,574 )
Payment for intangible assets acquired     (850 )     (2,063 )
                 
Net cash provided by investing activities     11,569       40,504  
                 
Cash flows from financing activities:                
Proceeds from loans payable, bank     4,348       4,501  
Proceeds from issuance of long-term debt

43,484


13,680
Repayment of long-term debt     (24,781 )     (22,527 )
Proceeds from exercise of options     1,729       5,523  
Dividends paid     (71,985 )     (60,058 )
Dividends paid to noncontrolling interest     (24,729 )     (20,301 )
Purchase of treasury stock     —       (11,289 )
                 
Net cash used in financing activities     (71,934 )     (90,471 )
                 
Effect of exchange rate changes on cash     641     740  
                 

Net decrease in cash and cash equivalents

    (10,043 )     (24,949 )
                 
Cash and cash equivalents - beginning of period     88,462       104,713  
                 
Cash and cash equivalents - end of period   $ 78,419     $ 79,764  
                 
Supplemental disclosure of cash flow information:                
Cash paid for:                
Interest   $ 6,578     $ 4,659  
Income taxes     48,643       44,693  

See notes to consolidated financial statements. 

Page 6

INTERPARFUMS, INC. AND SUBSIDIARIES

 

(Unaudited) 

 

1. Significant Accounting Policies:

 

The accounting policies we follow are set forth in the notes to our consolidated financial statements included in our Form 10-K, which was filed with the Securities and Exchange Commission for the year ended December 31, 2023.

 

2. Recent Agreements

 

Van Cleef & Arpels


In 2006, Van Cleef & Arpels and Interparfums SA signed a 12-year worldwide license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels brand name, which was subsequently extended for a further six years until December 31, 2024. Discussions have been underway since 2023 with a view to renewing the license agreement. The new agreement will strengthen the selective distribution of Van Cleef & Arpels fragrances worldwide. The license is to be renewed for an additional 9-year term, beginning January 1, 2025. 


Abercrombie & Fitch

 

In 2023, we announced our agreement to distribute Abercrombie & Fitch’s number one men’s fragrance, Fierce, in selected markets. The first phase of the agreement, which became effective on September 1, 2023, covers Fierce distribution in certain major markets, including Europe, Mexico and Australia. The second phase, which activated in February 2024, covers distribution in additional markets in Western Europe and Latin America, and may include other flankers of the Fierce family of products.

 

Roberto Cavalli

 

In July 2023, we closed a transaction agreement with Roberto Cavalli, whereby an exclusive and worldwide license was granted for the production and distribution of Roberto Cavalli brand perfumes and fragrance related products. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license became effective in July 2023 and will last for 6.5 years. We began shipping Roberto Cavalli perfumes and fragrance related products in February 2024.

 

Lacoste

 

In December 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted for the production and distribution of Lacoste brand perfumes and cosmetics. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license became effective in January 2024 and will last for 15 years. We began shipping Lacoste fragrances in January 2024.


Dunhill

 

The Dunhill fragrance license expired on September 30, 2023 and was not renewed. The Company had a twelve-month sell-off period during which it maintained the right to sell-off remaining Dunhill fragrance inventory, which is customary in the fragrance industry. As of September 30, 2024, all finished goods and components have been sold and we no longer carry any inventory related to Dunhill. 

 

Rochas Fashion

 

As a result of operational challenges faced by the Rochas Fashion business in prior years, we took a $2.4 million impairment charge and a $6.8 million impairment charge on our Rochas Fashion trademark in the first quarter of 2021 and the fourth quarter of 2022, respectively, resulting in a net book value for the trademark of $11.9 million. In 2023, the Rochas team underwent a strategic shift to take over their own brand operations, exiting contracts with manufacturers and distributors to make this new structure operational beginning in 2024. Management has reviewed and agreed with an independent expert's conclusion that the valuation based on this new business model would not require additional impairments as of December 31, 2023. There have been no triggering events through September 30, 2024 to require additional impairment analysis. 


Page 7


INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

Land and Building Acquisition - Headquarters in Paris

 

In April 2021, Interparfums SA, our 72% owned French Subsidiary, completed the acquisition of its headquarters at 10 rue de Solférino in the 7th arrondissement of Paris from the property developer. This is an office complex combining three buildings connected by two inner courtyards, and consists of approximately 40,000 total sq. ft.

 

The purchase price included the complete renovation of the site. As of September 30, 2024, $156 million (€139 million) of the purchase price, including approximately $3 million of acquisition costs, is included in property, equipment and leasehold improvements on the accompanying consolidated balance sheet. The purchase price has been allocated approximately $64.1 million (€57 million) to land and $91.9 million (€82 million) to the building. The building, which was delivered on February 28, 2022, includes the building structure, development of the property, façade waterproofing, general and technical installations and interior fittings that will be depreciated over a range of 7 to 50 years. The Company has elected to depreciate the building cost based on the useful lives of its components. 

 

The acquisition was financed by a 10-year €120 million (approximately $134.4 million) bank loan which bears interest at one-month Euribor plus 0.75%. Approximately €80 million of the variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1%.

 

3. Recent Accounting Pronouncements:

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance and allocate resources. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our disclosures.


In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and shall be applied on a prospective basis with the option to apply retrospectively. We are currently evaluating the impact of adopting this ASU on our disclosures.


There are no other recent accounting pronouncements issued but not yet adopted that would have a material effect on our consolidated financial statements.

 

4. Inventories:

 

Inventories consist of the following:

 

(In thousands)   September 30, 2024     December 31, 2023  
Raw materials and component parts   $ 152,302     $ 158,733  
Finished goods     260,456       213,126  
                 
    $ 412,758     $ 371,859  


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INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements


5. Fair Value Measurement:

 

The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.


            Fair Value Measurements at September 30, 2024  
    Total     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		     Significant Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  
Assets:                        
Short-term investments   $ 78,783     $ 8,940     $ 69,843     $ —  
Interest rate swaps     2,462       —       2,462       —  
Foreign currency forward exchange contracts not accounted for using hedge accounting

225


—


225


—
                                 
    $ 81,470     $ 8,940     $ 72,530     $ —  
Liabilities:















Foreign currency forward exchange contracts accounted for using hedge accounting

216


—


216


—



















$ 216

$ —

$ 216

$ —

 

            Fair Value Measurements at December 31, 2023  
    Total     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		     Significant Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  
Assets:                        
Short-term investments   $ 94,304     $ 12,868     $ 80,614     $ 822  
Interest rate swaps     3,909       —       3,909       —  
Foreign currency forward exchange contracts not accounted for using hedge accounting     359       —       359       —  
Foreign currency forward exchange contracts accounted for using hedge accounting     1,533       —       1,533       —  
                                 
    $ 100,105     $ 12,868     $ 86,415     $ 822  

 

Page 9


INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements


The carrying amount of cash and cash equivalents, short-term investments including money market funds and marketable equity securities, accounts receivable, other receivables, accounts payable and accrued expenses approximate fair value due to the short terms to maturity of these instruments. The carrying amount of loans payable approximates fair value as the interest rates on the Company’s indebtedness approximate current market rates. The fair value of the Company’s long-term debt was estimated based on the current rates offered to companies for debt with the same remaining maturities and is approximately equal to its carrying value.


Foreign currency forward exchange contracts are valued based on quotations from financial institutions and the value of interest rate swaps is the discounted net present value of the swaps using third party quotes from financial institutions.

 

6. Derivative Financial Instruments:

 

The Company enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Before entering into a derivative transaction for hedging purposes, it is determined that a high degree of initial effectiveness exists between the change in value of the hedged item and the change in the value of the derivative instrument from movement in exchange rates. High effectiveness means that the change in the cash flows of the derivative instrument will effectively offset the change in the cash flows of the hedged item. The effectiveness of each hedged item is measured throughout the hedged period and is based on the dollar offset methodology and excludes the portion of the fair value of the foreign currency forward exchange contract attributable to the change in spot-forward difference which is reported in current period earnings. Any hedge ineffectiveness is also recognized as a gain or loss on foreign currency in the income statement. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued, and gains and losses accumulated in other comprehensive income are reclassified to earnings. If it is probable that the forecasted transaction will no longer occur, then any gains or losses accumulated in other comprehensive income are reclassified to current-period earnings. 

 

In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a €50 million (approximately $56 million) 4-year term loan with a variable interest rate. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. This swap is a hedged derivative instrument and is therefore recorded at fair value and changes in fair value are reflected in other comprehensive income.

 

In connection with the April 2021 acquisition of the office building complex in Paris, €120 million (approximately $134.4 million) of the purchase price was financed through a 10-year term loan. The Company entered into interest rate swap contracts related to €80 million of the loan, effectively exchanging the variable interest rate to a fixed rate of approximately 1.1%. This derivative instrument is recorded at fair value and changes in fair value are reflected in the accompanying consolidated statements of income.

 

Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income (loss) and gains and losses in derivatives not designated as hedges are included in loss (gain) on foreign currency on the accompanying consolidated statements of income. Such gains and losses were immaterial for the three and nine months ended September 30, 2024 and 2023, respectively.

 

All derivative instruments are reported as either assets or liabilities on the consolidated balance sheet measured at fair value. The valuation of interest rate swaps is included in long-term debt on the accompanying consolidated balance sheet. The valuation of foreign currency forward exchange contracts at September 30, 2024, resulted in a net asset and is included in other current assets on the accompanying consolidated balance sheet.


At September 30, 2024, the Company had foreign currency contracts in the form of forward exchange contracts with notional amounts of approximately USD $21 million and GBP £7 million which all have maturities of less than one year. 


Page 10


INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

 

7.

 Leases:

 

The Company leases its offices and warehouses, vehicles, and certain office equipment, substantially all of which are classified as operating leases. The Company currently has no material financing leases. The Company determines if an arrangement is a lease at inception. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.

 

In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on the lease. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date for the location in which the lease is held in determining the present value of lease payments.

 

As of September 30, 2024, the weighted average remaining lease term was 4.2 years and the weighted average discount rate used to determine the operating lease liability was 3%. Rental expense related to operating leases was $1.6 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, as compared to $1.5 million and $4.5 million for the corresponding periods of the prior year. Operating lease payments included in operating cash flows totaled $4.4 million and $4.0 million for the nine months ended September 30, 2024 and 2023, respectively, and noncash additions to operating lease assets totaled $1.2 million and $5.7 million for the nine months ended September 30, 2024 and 2023, respectively.

 

8. Share-Based Payments:

 

The Company maintains a stock option program for key employees, executives and directors. The plans, all of which have been approved by shareholder vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year term and vest over a four to five-year period. The fair value of shares vested during the nine months ended September 30, 2024 and 2023 aggregated $0.04 million and $0.10 million, respectively. Compensation cost, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period for the entire award. Forfeitures are estimated based on historic trends. It is generally our policy to issue new shares upon exercise of stock options. 

 

The following table sets forth information with respect to nonvested options for the nine months ended September 30, 2024:

 

    Number of Shares     Weighted Average Grant-Date Fair Value  
Nonvested options – beginning of period     122,100     $ 24.47  
Nonvested options granted     —       —  
Nonvested options vested or forfeited     (3,380 )   $ 12.02  
Nonvested options – end of period     118,720     $ 24.83  


Page 11


INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

 

Share-based payment expense decreased income before income taxes by $0.60 million and $1.77 million for the three and nine months ended September 30, 2024 respectively, as compared to $0.62 million and $1.89 million for the corresponding periods of the prior year, and decreased income attributable to Interparfums, Inc. by $0.4 million and $1.17 million for the three and nine months ended September 30, 2024 respectively, as compared to $0.41 million and $1.27 million for the corresponding periods of the prior year.

 

The following table summarizes stock option information as of September 30, 2024:

 

    Shares     Weighted Average
Exercise Price		  
             
Outstanding at January 1, 2024     308,970     $ 86.52  
Options forfeited     (380 )     73.09  
Options exercised     (24,920 )     69.39  
                 
Outstanding at September 30, 2024     283,670     $ 88.04  
                 
Options exercisable     164,950     $ 70.69  
Options available for future grants     537,745          

 

As of September 30, 2024, the weighted average remaining contractual life of options outstanding is 2.23 years (0.96 years for options exercisable); the aggregate intrinsic value of options outstanding and options exercisable is $12.6 million and $9.7 million, respectively; and unrecognized compensation cost related to stock options outstanding aggregated $2.2 million.

 

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the nine months ended September 30, 2024 and 2023 were as follows:

 

(In thousands)   September 30, 2024     September 30, 2023  
             
Cash proceeds from stock options exercised   $ 1,729     $ 5,523  
Tax benefits     272       900  
Intrinsic value of stock options exercised     1,721       6,135  

 

There were no options granted during the nine months ended September 30, 2024 and September 30, 2023.

 

Expected volatility is estimated based on historic volatility of the Company’s common stock. The expected term of the option is estimated based on historical data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors maintain its current payout ratio as a percentage of earnings.

 

In March 2022, Interparfums SA, our 72% owned French Subsidiary, approved a plan to grant an aggregate of 88,400 shares of its stock to all Interparfums SA employees and corporate officers having more than six months of employment at grant date, subject to certain corporate performance conditions. The shares, subject to adjustment for stock splits, will be distributed in June 2025.

 

The fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the Euronext on the date of grant. The estimated number of shares to be distributed of 103,409 has been determined taking into account employee turnover. The aggregate cost of the grant of approximately $4.2 million will be recognized as compensation cost on a straight-line basis over the requisite three and a quarter year service period.


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INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

In order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distributed or to be distributed pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA. As of September 30, 2024 the Company acquired 96,371 shares at an aggregate cost of $4.1 million.

 

All share purchases and issuances have been classified as equity transactions on the accompanying balance sheet. 

 

9. Net Income Attributable to Interparfums, Inc. Common Shareholders:

 

Net income attributable to Interparfums, Inc. per common share (“basic EPS”) is computed by dividing net income attributable to Interparfums, Inc. by the weighted average number of shares outstanding. Net income attributable to Interparfums, Inc. per share assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding, plus the incremental shares outstanding assuming the exercise of dilutive stock options using the treasury stock method.

 

The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:


    Three months ended  
Nine months ended
(In thousands)   September 30,  
September 30,
    2024     2023  
2024

2023
Numerator:            





Net income attributable to Interparfums, Inc.   $ 62,259     $ 53,214  
$ 140,130

$ 142,234
Denominator:                







Weighted average shares     32,026       31,976  

32,030


32,000
Effect of dilutive securities:                







Stock options     240       148  

236


149
Denominator for diluted earnings per share     32,266       32,124  

32,266


32,149
                 







Earnings per share:                







Net income attributable to                







Interparfums, Inc. common shareholders:                







Basic   $ 1.94     $ 1.66  
$ 4.37

$ 4.44
Diluted   $  1.93     $  1.66  
$ 4.34

$ 4.42


Not included in the above computations are the effect of antidilutive potential common shares which consist of outstanding options to purchase 0.05 million shares of common stock for the three and nine months ended September 30, 2024. There were no antidilutive potential common shares outstanding for the three and nine months ended September 30, 2023.


Page 13


INTERPARFUMS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

 


10. Segment and Geographic Areas:

 

The Company manufactures and distributes one product line, fragrances and fragrance related products. The Company manages its business in two segments, European based operations and United States based operations. For European based operations, assets and business operations are primarily conducted in France, and include the results and assets of Interparfums Luxury Brands, Inc., located in the United States. For Unites States based operations, assets and business operations are primarily conducted in the United States, and include the results and assets of Interparfums Italia Srl, located in Italy. Both European based operations and United States based operations primarily represent the sale of prestige brand name fragrances.


Information on our operations by segments is as follows:

 

(In thousands)   Three Months Ended  
Nine Months Ended


September 30,

September 30,
    2024     2023  
2024

2023
Net sales:                







United States   $ 146,101     $ 134,469  
$ 362,059

$ 327,359
Europe     282,481       233,500  

739,454


661,577
Eliminations of intercompany sales     (3,953 )     —  

(10,692 )

—
                 







    $ 424,629     $ 367,969  
$ 1,090,821

$ 988,936
                 







Net income attributable to Interparfums, Inc.:                







United States   $ 24,263     $ 20,157  
$ 49,015

$ 46,067
Europe     39,869       33,057  

95,966


96,167
Eliminations     (1,873 )     —  

(4,851 )

—
    $ 62,259     $ 53,214  
$ 140,130

$ 142,234

 

Eliminations of intercompany sales relate to European based operations products sold to United States based operations. 


    September 30,     December 31,  
    2024     2023  
Total Assets:                
United States   $ 368,375     $ 344,341  
Europe     1,130,308       1,066,684  
Eliminations     (18,083 )     (41,696 )

 

   $ 1,480,600     $ 1,369,329  


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INTERPARFUMS, INC. AND SUBSIDIARIES

 

 

Forward Looking Information

 

Statements in this report 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 Interparfums’ annual report on Form 10-K for the fiscal year ended December 31, 2023, and the reports Interparfums files from time to time with the Securities and Exchange Commission (“SEC”). Interparfums does not intend to and undertakes no duty to update the information contained in this report.


Overview

 

We operate in the fragrance business, and manufacture, market and distribute a wide array of prestige fragrances and fragrance related products. We manage our business in two segments, European based operations and United States based operations. Certain prestige fragrance products are produced and marketed by our European based operations through our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext.

 

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 67% of net sales for the nine months ended September 30, 2024 and 2023, respectively. We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, Rochas and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world. Our exclusive and worldwide license for the production and distribution of Lacoste brand perfumes and cosmetics became effective in January 2024.

 

Through our United States based operations, we also produce and distribute fragrance and fragrance related products. United States based operations represented 33% of net sales for the nine months ended September 30, 2024 and 2023, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, Emanual Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta and Roberto Cavalli brands.

 

Substantially all of our prestige fragrance brands are licensed from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses. With respect to the Company’s largest brands, we license the Jimmy Choo, Montblanc, Coach, GUESS, Donna Karan/DKNY, Lacoste, and Ferragamo brand names.

 

As a percentage of net sales, product sales for the Company’s largest brands were as follows:

 

   

Nine Months Ended

September 30,
    2024
   2023
             
Jimmy Choo     17 %     17 %
Montblanc     16 %     18 %
Coach     14 %     15 %
GUESS     11 %     11 %
Donna Karan/DKNY     7 %     7 %
Lacoste

6 %

—
Ferragamo     4 %     5 %

 

Page 15


INTERPARFUMS, INC. AND SUBSIDIARIES

Quarterly sales fluctuations are influenced by the timing of new product launches as well as the third and fourth quarter holiday season. In certain markets where we sell directly to retailers, seasonality is more evident. We primarily sell directly to retailers in France, the United States, and Italy.

 

We grow our business in two distinct ways. First, we grow by adding new brands to our portfolio, through new licenses or other arrangements, or outright acquisitions of brands. Second, we grow through the introduction of new products and by supporting new and established products through advertising, merchandising and sampling, as well as phasing out underperforming products, so we can devote greater resources to those products with greater potential. The economics of developing, producing, launching and supporting products influence our sales and operating performance each year. The introduction of new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.

 

Our business is not capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components from our suppliers. These components are received and stored directly at our third-party fillers or received at one of our distribution centers. For those components received at one of our distribution centers, based upon production needs, the components are subsequently sent to one of several third party fillers, which manufacture the finished product for us and then deliver them to one of our distribution centers.

 

As with any global business, many aspects of our operations are subject to influences outside our control. We believe we have a strong and well diversified brand portfolio with global reach and potential. As part of our strategy, we plan to continue to make investments behind fast-growing markets and channels to grow market share. 

 

Our reported net sales are impacted by changes in foreign currency exchange rates as greater than 50% of net sales of our European based operations are denominated in U.S. dollars, while almost all costs of our European based operations are incurred in euro. We address certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments and primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates.

 

Recent Important Events

 

Please see our discussion of Recent Important Events, which is incorporated by reference to Note 2 to the Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.

 

Discussion of Critical Accounting Policies

 

Information regarding our critical accounting policies can be found in our 2023 Annual Report on Form 10-K filed with the SEC.

 

Page 16


INTERPARFUMS, INC. AND SUBSIDIARIES


Results of Operations

 

Three and Nine Months Ended September 30, 2024 as Compared to the Three and Nine Months Ended September 30, 2023

 

Net Sales:

 

    Three Months Ended
Nine Months Ended


September 30,
September 30,
(in millions)   2024     2023     % Change
2024

2023

% Change
       











European based product sales   $ 282.4     $ 233.5       21.0 %
$ 739.4

$ 661.5


11.8 %
United States based product sales     146.1       134.5       8.7 %

362.1


327.4


10.6 %
Eliminations     (3.9)     —       —  

(10.7 )

—


—
    $ 424.6     $ 368.0       15.4 %
$ 1,090.8

$ 988.9


10.3 %

 

Net sales for the three months ended September 30, 2024 increased 15.4% from the three months ended September 30, 2023. At comparable foreign currency exchange rates, net sales increased 15.0% from the third quarter of 2023. The average dollar/euro exchange rate for the current third quarter was 1.10 compared to 1.09 in the third quarter of 2023, while the average dollar/euro exchange rate was 1.09 for the nine months ended September 30, 2024 compared to 1.08 for the nine months ended September 30, 2023. Net sales for the nine months ended September 30, 2024 increased 10.3% as compared to the nine months ended September 30, 2023. 

 

Continuing the trend from the second quarter of 2024, the current third quarter saw strong sales growth as compared to the corresponding period of the prior year. This was driven by both the growing global fragrance market in combination with the addition of our newest brands, Lacoste and Roberto Cavalli, which contributed 10% to the increase. 

 

For European based operations, Jimmy Choo and Montblanc sales grew by 17% and 10%, respectively, compared to the corresponding period of the prior year, driven by the launch of Jimmy Choo I Want Choo Le Parfum and the ongoing strength in the Montblanc Explorer and Legend lines. Sales of Coach remained flat as compared to the corresponding period of the prior year. This was largely driven by the substantial increase in sales of Coach in the third quarter of 2023 of 32% as compared to the third quarter of 2022.  During the first quarter of 2024, we began selling the Lacoste brand, which added $29 million and $68 million in sales during the three and nine months ended September 30, 2024, respectively. During the third quarter of 2024, we rolled out the international launch of Lacoste Original and launched a new Karl Lagerfeld pillar, Ikonik. 

 

Sales by our United States based operations grew a modest 8.7% in the third quarter of 2024 off a high 2023 base when third quarter sales had expanded 64%. The addition and extension of Roberto Cavalli contributed to the continued growth in United States based operations with the debut of Sweet Ferocious in August of this year. GUESS and Donna Karan/DKNY rose 16% and 4%, respectively, compared to the corresponding period of the prior year, following the roll-out of GUESS Iconic and DKNY 24/7 building upon the strong performance of our legacy scents for both brands.


The third quarter growth was in line with expectations, and we are confident in our future as we look forward to executing our plans for the remainder of 2024. Our brands are in high demand in a robust environment for the fragrance industry, and we have many exciting developments planned for the Company. We have a large number of holiday programs planned as well as the launch of the Roberto Cavalli Wild Heart duo planned for the fourth quarter. While the pace of growth in the market is starting to slow down, the power of our diverse brand portfolio, in combination with our agile operating model, should help us gain market share.


Page 17

INTERPARFUMS, INC. AND SUBSIDIARIES

Net Sales to Customers by Region   Nine Months Ended  
  (In millions)
September 30,

  2024     2023  
             
North America   $ 397.4     $ 369.2  
Western Europe     281.0       242.5  
Asia/Pacific     154.2       141.5  
Central and South America     88.9       71.7  
Middle East and Africa     92.5       88.6  
Eastern Europe     76.8       75.4  
    $ 1,090.8     $ 988.9  


In the nine months ended September 30, 2024, net sales in our largest market, North America, rose 8% as compared to the prior year period, followed by increases in the Western Europe and Asia/Pacific markets of 16% and 9%, respectively. Our net sales in Central and South America and the Middle East and Africa were also robust, up 24% and 4%, respectively in the nine months ended September 30, 2024 as compared to the prior year period. Additionally, our travel retail business is continuing to strengthen. Eastern Europe was adversely impacted by sourcing constraints earlier in the year, which returned to normal business levels in the third quarter of 2024.

 

Gross Profit Margin   Three Months Ended
Nine Months Ended
    (in millions)
September 30,
September 30,
  2024
   2023
2024
2023
             





European based operations                







Net sales   $ 282.4     $ 233.5  
$ 739.4

$ 661.5
Cost of sales     95.5       73.3  

249.3


220.6
Gross profit margin   $ 186.9     $ 160.2  
$ 490.1

$ 440.9
Gross profit margin as a % of net sales     66.2 %     68.6 %

66.3 %

66.6 %
                 







United States based operations

               







Net sales   $ 146.1     $ 134.5  
$ 362.1

$ 327.4
Cost of sales     59.6       59.7  

151.4


141.9
Gross profit margin   $ 86.5     $ 74.8  
$ 210.7

$ 185.5
Gross profit margin as a % of net sales     59.2 %     55.6 %

58.2 %

56.7 %

 

The Company’s gross profit margin as a percentage of net sales was 63.9% and 63.6% for the three and nine months ended September 30, 2024, respectively, as compared to 63.9% and 63.3% for the corresponding periods of the prior year. The increase in the nine month period ending September 30, 2024 as compared to the prior year period was driven by the impact of certain one-time expenses related to inventory in 2023 partially offset by unfavorable segment, brand and channel mix in the current year. Gross profit margins remained flat from the same three month period in the prior year.  

 

For European based operations, gross profit margin as a percentage of net sales was 66.2% and 66.3% for the three and nine months ended September 30, 2024, respectively, as compared to 68.6% and 66.6% for the corresponding periods of the prior year. European based operations were negatively impacted by brand and channel mix during the three and nine months ended September 30, 2024 as compared to the prior year period. 

 

Page 18

INTERPARFUMS, INC. AND SUBSIDIARIES

For United States based operations, gross profit margin as a percentage of net sales was 59.2% and 58.2% for the three and nine months ended September 30, 2024, respectively, as compared to 55.6% and 56.7% for the corresponding periods of the prior year. The increase in both periods was driven by favorable brand and channel mix. 

 

Generally, we do not bill customers for shipping and handling costs, and such costs, which aggregated $3.8 million and $8.8 million for the three and nine months ended September 30, 2024, respectively, as compared to $3.9 million and $11.4 million for the corresponding periods of the prior year, are included in selling, general and administrative expenses in the consolidated statements of income. As such, our Company’s gross profit may not be comparable to other companies, which may include these expenses as a component of cost of goods sold. The improvement in shipping and handling costs during the three and nine months ended September 30, 2024 as compared to corresponding periods in 2023 is a direct benefit of lower transportation costs seen globally.


Selling, general and administrative expenses  

Three Months Ended

  
Nine Months Ended
     (In millions)
September 30,

September 30,

  2024     2023  
2024

2023
             





European based operations

               







Selling, general and administrative expenses   $ 108.1     $ 98.7  
$ 306.6

$ 265.2
Selling, general and administrative expenses as a percent of net sales     38.3 %     42.3 %

41.5 %

40.1 %
                 







United States based operations                







Selling, general and administrative expenses   $ 57.0     $ 49.1  
$ 148.9

$ 128.7
Selling, general and administrative expenses as a percent of net sales     39.0 %     36.5 %

41.1 %

39.3 %

 

The Company’s selling, general and administrative expenses as a percentage of net sales were 38.9% and 41.8% for the three and nine months ended September 30, 2024 as compared to 40.2% and 39.8% for the three and nine months ended September 30, 2023. The increase in the first three quarters of the year was largely driven by increased spending on promotional and advertising activities as compared to the prior year period. Additionally, starting in 2024, the Company began to amortize the cost of the Lacoste license which represented $4.8 million during the first nine months of the year. These costs are being incurred at approximately $1.6 million quarterly over the remaining life of the license. The decrease in the third quarter was driven by the phasing of promotional and advertising activities by our European based operations discussed in detail below. 

 

For European based operations, selling, general and administrative expenses increased 9.6% and 15.6% for the three and nine months ended September 30, 2024 as compared to the corresponding period of the prior year, and represented 38.3% and 41.5% of net sales for the three and nine months ended September 30, 2024, respectively, as compared to 42.3% and 40.1% for the three and nine months ended September 30, 2023, respectively. As discussed above, this increase is driven by increased promotion and advertising spending as well as the impact of the amortization of the Lacoste license. While promotion and advertising spend increased on a year to date basis, a portion of the activities planned for the third quarter were pushed into the fourth quarter resulting in a decrease in selling, general and administrative expenses as a percentage of net sales in the current quarter as compared to the prior year period. For United States based operations, selling, general and administrative expenses increased 16.1% and 15.7% for the three and nine months ended September 30, 2024, as compared to the corresponding period of the prior year, and represented 39.0% and 41.1% of net sales for the three and nine months ended September 30, 2024, respectively, as compared to 36.5% and 39.3% for the three and nine months ended September 30, 2023, respectively. The increase was largely driven by continued investment in infrastructure and headcount to support the growth of the business as well as increased promotional and advertising spending. 

 

Promotion and advertising included in selling, general and administrative expenses aggregated $66.8 million and $181.5 million for the three and nine months ended September 30, 2024, respectively, as compared to $62.8 million and $152.6 million for the corresponding periods of the prior year and represented 15.7% and 16.6% of net sales for the three and nine months ended September 30, 2024, respectively, as compared to 17.1% and 15.4% for the corresponding periods of the prior year. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness. We believe that our promotion and advertising efforts have a beneficial effect on sales. Historically, the Company incurred the majority of our promotional and advertising expenditures in the second half of the year. Beginning in 2024, the Company implemented a strategy to increase spending in the first half of the year to better support and drive business growth throughout the year. Additionally, as the first three quarters of 2024 saw a lighter innovation program than prior years, the Company focused on increasing promotional and advertising spending to support the continued success of our existing brands and to support the initial launches of our new brands, Lacoste and Roberto Cavalli. We also continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience. Long term, we continue to anticipate that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales.

 

Page 19


INTERPARFUMS, INC. AND SUBSIDIARIES


Royalty expense included in selling, general and administrative expenses aggregated $34.0 million and $88.2 million for the three and nine months ended September 30, 2024, respectively, as compared to $29.1 million and $77.2 million for the corresponding periods of the prior year. Royalty expense represented 8.0% and 8.1% of net sales for the three and nine months ended September 30, 2024, respectively, as compared to 7.9% and 7.8% of net sales for the corresponding periods of the prior year. This increase was primarily driven by unfavorable brand mix.

 

Income from Operations

 

As a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our operating margins aggregated 25.0% and 21.9% for the three and nine months ended September 30, 2024, respectively, as compared to 23.7% and 23.5% for the corresponding periods of the prior year.

 

Other Income and Expense


Overall, other income and expense for the nine months ended September 30, 2024, was a loss of $7.1 million as compared to a gain of $2.2 million in the corresponding prior year period. The main drivers of this change are discussed in more detail below. These include an increase in interest expense on borrowings of $0.3 million, a loss on foreign currency of $3.7 million, and a reduction of interest income related to cash and cash equivalents and short-term investments of $1.4 million. Additionally, there was a one-time gain of $3.1 million recognized in 2023 related to the sale of marketable securities. 

 

Interest expense is primarily related to the financing of brand and licensing acquisitions. In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a $56 million (€50 million) four-year loan agreement. The loan agreement bears interest at EURIBOR-1 month rates plus a margin of 0.825%. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. Additionally, in April 2021, we completed the acquisition of the headquarters of Interparfums SA. The acquisition was financed by a 10-year approximately $128.5 million (€120 million) bank loan which bears interest at one-month Euribor plus 0.75%. Approximately $89.6 million (€80 million) of the variable rate debt was swapped for fixed interest rate debt with a maximum interest rate of 2% per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1%. Additionally in July 2024, the Company entered into a $44.8 million (€40 million) three-year loan agreement that bears a fixed interest rate of 4.03%. The loan was used to purchase additional short-term investments. Long-term debt including current maturities aggregated $179.1 million and $157.5 million as of September 30, 2024 and December 31, 2023, respectively.

 

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Greater than 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in the three and nine months ended September 30, 2024 and 2023.

 

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments and realized and unrealized gains and losses on marketable equity securities. Interest income was $2.5 million in the nine months ended September 30, 2024 compared to $3.9 million in the prior year period. As of September 30, 2024, short-term investments also include approximately $8.9 million of marketable equity securities of other companies in the luxury goods sector. In the first quarter of 2023, the Company sold marketable securities which generated a gain of $3.1 million. The Company purchased additional marketable securities throughout 2023 and in the first nine months of 2024, resulting in an unrealized loss of $0.9 million for the first nine months of 2024. 


Income Taxes

 

Our consolidated effective tax rate was 23.7% and 23.5% for the nine months ended September 30, 2024 and 2023, respectively. The effective tax rate for European based operations was 25.0% for both the nine months ended September 30, 2024 and 2023, while the effective tax rate for United States based operations was 19.8% for the nine months ended September 30, 2024, as compared to 18.8% for the corresponding period of the prior year. Our effective tax rate for United States based operations differs from the 21% statutory rate in the United States as it is a blended rate across multiple jurisdictions, and takes into account benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income, slightly offset by state and local taxes. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where we operate.

 

Page 20

INTERPARFUMS, INC. AND SUBSIDIARIES

Net Income

 

    Three Months Ended
   Nine Months Ended
    (In thousands)
September 30, September 30,
    2024     2023   2024 2023
             







Net income attributable to European based operations   $ 54,445     $ 45,965  
$ 132,572

$ 133,480
Net income attributable to United States based operations     24,263       20,155  

49,015


46,066
Eliminations     (1,873 )     —  

(4,851 )

—
Net income     76,835       66,120  

176,736


179,546
Less: Net income attributable to the noncontrolling interest     14,576       12,906  

36,606


37,312
Net income attributable to Interparfums, Inc.   $ 62,259     $ 53,214  
$ 140,130

$ 142,234

 

Net income attributable to Interparfums, Inc. was $62.3 million and $140.1 million for the three and nine months ended September 30, 2024, respectively, as compared to $53.2 million and $142.2 million for the corresponding periods of the prior year.

 

Net income attributable to European based operations was $54.4 million and $132.6 million for the three and nine months ended September 30, 2024, respectively, as compared to $46.0 million and $133.5 million for the corresponding periods of the prior year, while net income attributable to United States based operations was $24.3 million and $49.0 million for the three and nine months ended September 30, 2024, respectively, as compared to $20.2 million and $46.1 million for the corresponding periods of the prior year. The significant fluctuations in net income for both European based operations and United States based operations are directly related to the previous discussions pertaining to changes in sales, gross margin, and selling, general and administrative expenses.

 

The noncontrolling interest arises from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European based operations and aggregated 28% of European based operations net income for both the nine months ended September 30, 2024 and 2023. Net profit margins attributable to Interparfums, Inc. for the nine months ended September 30, 2024 and 2023 aggregated 12.8% and 14.4%, respectively.

 

Liquidity and Capital Resources

 

Our conservative financial tradition has enabled us to amass significant cash balances. As of September 30, 2024, we had $157.2 million in cash, cash equivalents and short-term investments, most of which are held in euro by our European based operations and is readily convertible into U.S. dollars. We have not had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term investments.

 

As of September 30, 2024, working capital aggregated $617 million. Approximately 76% of the Company’s total assets are held by European based operations, and approximately $253 million of trademarks, licenses and other intangible assets are also held by European based operations.

 

The Company is party to a number of licenses and other agreements for the use of trademarks and rights in connection with the manufacture and sale of its products expiring at various dates through 2039. In connection with most of these license agreements, the Company is subject to minimum annual advertising commitments, minimum annual royalties and other commitments. See Item 8. Financial Statements and Supplementary Data – Note 12 – Commitments in our 2023 annual report on Form 10-K, which is incorporated by reference herein. Future advertising commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2023, without consideration for potential renewal periods and do not reflect the fact that our distributors share our advertising obligations.


Page 21

INTERPARFUMS, INC. AND SUBSIDIARIES

The Company hopes to continue to benefit from its strong financial position to potentially acquire one or more brands, either on a proprietary basis or as a licensee. Discussions have been underway since 2023 with a view to renewing the Van Cleef & Arpels license agreement. The license is to be renewed for an additional 9-year term, beginning January 1, 2025. In July 2023, we entered into a global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Roberto Cavalli brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect in July 2023, and we began shipping products in February 2024.

 

In December 2022, we entered into a long-term global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Lacoste brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect and products started to ship in January 2024.

 

Cash provided by operating activities aggregated $49.7 million for the nine months ended September 30, 2024 and compared to $24.3 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, working capital items used $147.0 million in cash from operating activities, as compared to $169.1 million in the 2023 period. Although from a cash flow perspective accounts receivables are up 41% from year end 2023, the balance is reasonable based on third quarter 2024 record sales levels and seasonality of the business. While day’s sales outstanding was 83 days, up from 71 days in the corresponding period of the prior year driven by changes in our channel mix, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels as of September 30, 2024 increased 9% from year end 2023 in support of our overall sales growth as well as the building up of inventory related to the inclusion of the Lacoste and Roberto Cavalli licenses which require large inventory needs to support the launches of these brands. Additionally, as we are working to manage down our inventory levels, we have seen increased conversion of raw materials into finished goods resulting in finished goods making up 63% of our inventory levels at September 30, 2024 as compared to 58% at September 30, 2023. Due to past supply constraints, we had strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold. These constraints have largely abated and we are gradually reversing some of these previous interventions. We are beginning to see the impacts of these recent inventory management efforts and will continue to work to optimize inventory levels.

 

Cash flows provided by investing activities in 2024 reflect purchases and sales of short-term investments. These investments consist of certificates of deposit with maturities greater than three months, marketable equity securities and other contracts. At September 30, 2024, approximately $2.2 million of certificates of deposit contain penalties where we would forfeit a portion of the interest earned in the event of early withdrawal.

 

Our business is not capital intensive as we do not own any manufacturing facilities. On a full year basis, we typically spend approximately $5 million on tools and molds, depending on our new product development calendar. Capital expenditures also include amounts for office fixtures, computer equipment and industrial equipment needed at our distribution centers.

 

Cash flows used in financing activities in 2024 reflect issuances and repayments of debt and payment of dividends to stockholders.

 

Our short-term financing requirements are expected to be met by available cash on hand at September 30, 2024, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2024 consist of a $25 million unsecured revolving line of credit provided by a domestic commercial bank and approximately $8 million in credit lines provided by a consortium of international financial institutions. There was $9.0 million of short-term borrowings outstanding pursuant to these facilities as of September 30, 2024 and $4.5 million outstanding as of September 30, 2023.

 

In February 2023, the Board of Directors authorized an annual dividend of $2.50 per share. In February 2024, the Board of Directors further increased the annual dividend to $3.00 per share. The next quarterly cash dividend of $0.75 per share is payable on December 31, 2024, to shareholders of record on December 16, 2024.

 

We believe that funds provided by or used in operations can be supplemented by our present cash position and available credit facilities, so that they will provide us with sufficient resources to meet all present and reasonably foreseeable future operating needs.

 

Inflation rates in the United States and foreign countries in which we operate did not have a significant impact on operating results for the nine months ended September 30, 2024

 

Page 22

INTERPARFUMS, INC. AND SUBSIDIARIES

 

General

 

We address certain financial exposures through a controlled program of risk management that primarily consists of the use of derivative financial instruments. We primarily enter into foreign currency forward exchange contracts in order to reduce the effects of fluctuating foreign currency exchange rates. We do not engage in the trading of foreign currency forward exchange contracts or interest rate swaps.

 

Foreign Exchange Risk Management

 

We periodically enter into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and to manage risks related to future sales expected to be denominated in a currency other than our functional currency. We enter into these exchange contracts for periods consistent with our identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the receivables and cash flows of Interparfums SA, whose functional currency is the euro. All foreign currency contracts are denominated in currencies of major industrial countries and are with large financial institutions, which are rated as strong investment grade.

 

All derivative instruments are required to be reflected as either assets or liabilities in the balance sheet measured at fair value. Generally, increases or decreases in fair value of derivative instruments will be recognized as gains or losses in earnings in the period of change. If the derivative is designated and qualifies as a cash flow hedge, then the changes in fair value of the derivative instrument will be recorded in other comprehensive income.

 

Before entering into a derivative transaction for hedging purposes, we determine that the change in the value of the derivative will effectively offset the change in the fair value of the hedged item from a movement in foreign currency rates. Then, we measure the effectiveness of each hedge throughout the hedged period. Any hedge ineffectiveness is recognized in the income statement.

 

At September 30, 2024, we had foreign currency contracts in the form of forward exchange contracts of approximately USD $21 million and GBP £7 million with maturities of less than one year. We believe that our risk of loss as the result of nonperformance by any of such financial institutions is remote.

 

Interest Rate Risk Management

 

We mitigate interest rate risk by monitoring interest rates, and then determining whether fixed interest rates should be swapped for floating rate debt, or if floating rate debt should be swapped for fixed rate debt.

 

 

Evaluation of Disclosure Controls and Procedures

 

Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rule 13a-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q (the “Evaluation Date”). Based on their review and evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the Evaluation Date, our Company’s disclosure controls and procedures were effective.

 

Changes in Internal Control Over Financial Reporting

 

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during the quarterly period covered by this report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


Page 23


 

 

Item (c).

 

In December 2022, our Board of Directors authorized a share repurchase program for our outstanding common stock. During 2023, the Company repurchased 116,860 shares at a cost of $15.4 million. These shares are classified as treasury shares on the accompanying consolidated balance sheet. In February 2024, our Board of Directors authorized the Company to continue repurchasing up to 130,000 shares throughout 2024.

 

Interparfums, Inc. Purchase of Common Stock
Period Total Number of Shares Purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
July 1-31 0 n/a 0 130,000 shares
August 1-31 0 n/a 0 130,000 shares
September 1-30 0 n/a 0 130,000 shares
Total 0 n/a 0 130,000 shares

 

 

Item (c). During the third quarter of 2024, no director or officer has adopted or terminated either any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as such terms are defined in the applicable regulation.

 

Items 1. Legal Proceedings, 1A. Risk Factors, 3. Defaults Upon Senior Securities and 4. Mine Safety Disclosures, are omitted as they are either not applicable or have been included in Part I.


Page 24



INTERPARFUMS, INC. AND SUBSIDIARIES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 6th day of November 2024.

 

  INTERPARFUMS, INC. 
     
  By: /s/ Michel Atwood  
  Chief Financial Officer 

 

Page 26

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

Exhibit 31.1

 

CERTIFICATIONS

 

I, Jean Madar, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Interparfums, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: November 6, 2024

 

/s/ Jean Madar  
Jean Madar,
Chief Executive Officer


Page 27

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

Exhibit 31.2

 

I, Michel Atwood, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Interparfums, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

 

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

Date: November 6, 2024

 

/s/ Michel Atwood  
Michel Atwood
Chief Financial Officer and
Principal Accounting Officer


Page 28

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

Exhibit 32.1

 

CERTIFICATION

 

The undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Interparfums, Inc., that the Quarterly Report of Interparfums, Inc. on Form 10-Q for the period ended September 30, 2024, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of Interparfums, Inc.

 

Date: November 6, 2024   By: /s/ Jean Madar  
      Jean Madar,
      Chief Executive Officer

 

A signed original of this written statement required by Section 906 has been provided to Interparfums, Inc. and will be retained by Interparfums, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.


Page 29

 

INTERPARFUMS, INC. AND SUBSIDIARIES

 

Exhibit 32.2

 

CERTIFICATION

 

The undersigned hereby certifies, in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Interparfums, Inc., that the Quarterly Report of Interparfums, Inc. on Form 10-Q for the period ended September 30, 2024, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of Interparfums, Inc.

 

Date: November 6, 2024   By: /s/ Michel Atwood  
      Michel Atwood
      Chief Financial Officer and
      Principal Accounting Officer

 

A signed original of this written statement required by Section 906 has been provided to Interparfums, Inc. and will be retained by Interparfums, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.


Page 30
v3.24.3
Cover - shares
 9 Months Ended
Sep. 30, 2024
Nov. 06, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2024  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 0-16469  
Entity Registrant Name INTERPARFUMS, INC.  
Entity Central Index Key 0000822663  
Entity Tax Identification Number 13-3275609  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 551 Fifth Avenue  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10176  
City Area Code (212)  
Local Phone Number 983-2640  
Title of 12(b) Security Common Stock, $.001 par value per share  
Trading Symbol IPAR  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   32,030,280
v3.24.3
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Current assets:    
Cash and cash equivalents $ 78,419 $ 88,462
Short-term investments 78,783 94,304
Accounts receivable, net 354,175 247,240
Inventories 412,758 371,859
Receivables, other 4,984 7,012
Other current assets 26,788 29,458
Income taxes receivable 533 691
Total current assets 956,440 839,026
Property, equipment and leasehold improvements, net 166,435 169,222
Right-of-use assets, net 25,471 28,613
Trademarks, licenses and other intangible assets, net 290,864 296,356
Deferred tax assets 19,742 14,545
Other assets 21,648 21,567
Total assets 1,480,600 1,369,329
Current liabilities:    
Loans payable - banks 8,957 4,420
Current portion of long-term debt 44,538 29,587
Current portion of lease liabilities 6,189 5,951
Accounts payable – trade 96,578 97,409
Accrued expenses 166,156 178,880
Income taxes payable 17,164 8,498
Total current liabilities 339,582 324,745
Long–term debt, less current portion 134,585 127,897
Lease liabilities, less current portion 21,304 24,517
Equity:    
Preferred stock, $.001 par; authorized 1,000,000 shares; none issued 0 0
Common stock, $.001 par; authorized 100,000,000 shares; outstanding 32,029,580 and 32,004,660 shares at September 30, 2024 and December 31, 2023, respectively 32 32
Additional paid-in capital 101,123 98,565
Retained earnings 762,826 693,848
Accumulated other comprehensive loss (32,641) (40,188)
Treasury stock, at cost, 9,981,665 and 9,981,665 shares at September 30, 2024 and December 31, 2023, respectively (52,864) (52,864)
Total Interparfums, Inc. shareholders’ equity 778,476 699,393
Noncontrolling interest 206,653 192,777
Total equity 985,129 892,170
Total liabilities and equity $ 1,480,600 $ 1,369,329
v3.24.3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Preferred stock, authorized 1,000,000 1,000,000
Preferred stock, issued 0 0
Common Stock, Par or Stated Value Per Share $ 0.001 $ 0.001
Common stock, authorized 100,000,000 100,000,000
Common stock, outstanding 32,029,580 32,004,660
Treasury stock, shares 9,981,665 9,981,665
v3.24.3
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Income Statement [Abstract]        
Net sales $ 424,629 $ 367,969 $ 1,090,821 $ 988,936
Cost of sales 153,469 132,962 396,519 362,568
Gross margin 271,160 235,007 694,302 626,368
Selling, general and administrative expenses 165,166 147,805 455,506 393,866
Income from operations 105,994 87,202 238,796 232,502
Other expenses (income):        
Interest expense 1,978 2,397 5,726 7,030
Loss (gain) on foreign currency 3,355 (669) 3,085 (656)
Interest and investment loss (income) 254 (1,062) (1,690) (8,421)
Other loss (income) 1 (77) (35) (125)
Nonoperating Income (Expense) 5,588 589 7,086 (2,172)
Income before income taxes 100,406 86,613 231,710 234,674
Income taxes 23,571 20,493 54,974 55,128
Net income 76,835 66,120 176,736 179,546
Less:  Net income attributable to the noncontrolling interest 14,576 12,906 36,606 37,312
Net income attributable to Interparfums, Inc. $ 62,259 $ 53,214 $ 140,130 $ 142,234
Net income attributable to Interparfums, Inc. common shareholders:        
Basic $ 1.94 $ 1.66 $ 4.37 $ 4.44
Diluted $ 1.93 $ 1.66 $ 4.34 $ 4.42
Weighted average number of shares outstanding:        
Basic 32,026 31,976 32,030 32,000
Diluted 32,266 32,124 32,266 32,149
Dividends declared per share $ 0.75 $ 0.625 $ 2.25 $ 1.875
v3.24.3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Comprehensive income:        
Net income $ 76,835 $ 66,120 $ 176,736 $ 179,546
Other comprehensive income:        
Net derivative instrument loss, net of tax (239) (363) (1,411) (4,606)
Transfer from OCI into earnings 0 0 (64) 1,709
Translation adjustments, net of tax 31,385 (15,692) 10,891 (2,657)
Comprehensive income 107,981 50,065 186,152 173,992
Comprehensive income attributable to the noncontrolling interests:        
Net income 14,576 12,906 36,606 37,312
Other comprehensive income:        
Net derivative instrument loss, net of tax (66) (100) (388) (327)
Translation adjustments, net of tax 8,989 (4,892) 2,257 (1,481)
Comprehensive income attributable to the noncontrolling interests 23,499 7,914 38,475 35,504
Comprehensive income attributable to Interparfums, Inc. $ 84,482 $ 42,151 $ 147,677 $ 138,488
v3.24.3
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Treasury Stock [Member]
Noncontrolling Interest [Member]
Beginning Balance at Dec. 31, 2022   $ 32 $ 90,186 $ 620,095 $ (56,056) $ (37,475) $ 171,364
Shares issued upon exercise of stock options     5,523        
Share-based compensation     935 820     133
Transfer of subsidiary shares purchased     (892)       (142)
Net income $ 179,546     142,234     37,312
Dividends       (60,058)     (20,301)
Foreign currency translation adjustment, net of tax         (1,176)   (1,481)
Transfer from other comprehensive income into earnings         1,709    
Net derivative instrument loss, net of tax         (4,279)   (327)
Shares repurchased           (11,289)  
Ending Balance at Sep. 30, 2023 876,867 32 95,752 703,091 (59,802) (48,764) 186,558
Beginning Balance at Jun. 30, 2023   32 95,984 669,688 (48,739) (48,764) 178,733
Shares issued upon exercise of stock options     332        
Share-based compensation     311 227     36
Transfer of subsidiary shares purchased     (875)       (125)
Net income 66,120     53,214     12,906
Dividends       (20,038)     0
Foreign currency translation adjustment, net of tax         (10,800)   (4,892)
Transfer from other comprehensive income into earnings         0    
Net derivative instrument loss, net of tax         (263)   (100)
Shares repurchased           0  
Ending Balance at Sep. 30, 2023 876,867 32 95,752 703,091 (59,802) (48,764) 186,558
Beginning Balance at Dec. 31, 2023 892,170 32 98,565 693,848 (40,188) (52,864) 192,777
Shares issued upon exercise of stock options     1,729        
Share-based compensation     780 833     179
Transfer of subsidiary shares purchased     49       (49)
Net income 176,736     140,130     36,606
Dividends       (71,985)     (24,729)
Foreign currency translation adjustment, net of tax         8,634   2,257
Transfer from other comprehensive income into earnings         (64)    
Net derivative instrument loss, net of tax         (1,023)   (388)
Shares repurchased           0  
Ending Balance at Sep. 30, 2024 985,129 32 101,123 762,826 (32,641) (52,864) 206,653
Beginning Balance at Jun. 30, 2024   32 100,505 724,268 (54,864) (52,864) 184,129
Shares issued upon exercise of stock options     359        
Share-based compensation     259 321     47
Transfer of subsidiary shares purchased     0       0
Net income 76,835     62,259     14,576
Dividends       (24,022)     (1,022)
Foreign currency translation adjustment, net of tax         22,396   8,989
Transfer from other comprehensive income into earnings         0    
Net derivative instrument loss, net of tax         (173)   (66)
Shares repurchased           0  
Ending Balance at Sep. 30, 2024 $ 985,129 $ 32 $ 101,123 $ 762,826 $ (32,641) $ (52,864) $ 206,653
v3.24.3
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Cash flows from operating activities:    
Net income $ 176,736 $ 179,546
Adjustments to reconcile net income to net cash used in operating activities:    
Depreciation and amortization 18,201 12,781
Provision for doubtful accounts 613 (560)
Noncash stock compensation 1,768 1,887
Share of income of equity investment (109) (125)
Noncash lease expense 4,533 4,163
Deferred tax provision (4,909) (5,075)
Change in fair value of derivatives (153) 740
Changes in:    
Accounts receivable (102,576) (96,076)
Inventories (35,237) (76,786)
Other assets 3,770 3,077
Operating lease liabilities (4,378) (4,044)
Accounts payable and accrued expenses (17,571) (10,919)
Income taxes, net 8,993 15,669
Net cash provided by operating activities 49,681 24,278
Cash flows from investing activities:    
Purchases of short-term investments (146,868) (145,427)
Proceeds from sale of short-term investments 162,176 192,568
Purchases of property, equipment and leasehold improvements (2,889) (4,574)
Payment for intangible assets acquired (850) (2,063)
Net cash provided by investing activities 11,569 40,504
Cash flows from financing activities:    
Proceeds from loans payable, bank 4,348 4,501
Proceeds from issuance of long-term debt 43,484 13,680
Repayment of long-term debt (24,781) (22,527)
Proceeds from exercise of options 1,729 5,523
Dividends paid (71,985) (60,058)
Dividends paid to noncontrolling interest (24,729) (20,301)
Purchase of treasury stock 0 (11,289)
Net cash used in financing activities (71,934) (90,471)
Effect of exchange rate changes on cash 641 740
Net decrease in cash and cash equivalents (10,043) (24,949)
Cash and cash equivalents - beginning of period 88,462 104,713
Cash and cash equivalents - end of period 78,419 79,764
Cash paid for:    
Interest 6,578 4,659
Income taxes $ 48,643 $ 44,693
v3.24.3
Significant Accounting Policies:
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Significant Accounting Policies:
1. Significant Accounting Policies:

 

The accounting policies we follow are set forth in the notes to our consolidated financial statements included in our Form 10-K, which was filed with the Securities and Exchange Commission for the year ended December 31, 2023.
v3.24.3
Recent Agreements:
 9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Recent Agreements:
2. Recent Agreements

 

Van Cleef & Arpels


In 2006, Van Cleef & Arpels and Interparfums SA signed a 12-year worldwide license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels brand name, which was subsequently extended for a further six years until December 31, 2024. Discussions have been underway since 2023 with a view to renewing the license agreement. The new agreement will strengthen the selective distribution of Van Cleef & Arpels fragrances worldwide. The license is to be renewed for an additional 9-year term, beginning January 1, 2025. 


Abercrombie & Fitch

 

In 2023, we announced our agreement to distribute Abercrombie & Fitch’s number one men’s fragrance, Fierce, in selected markets. The first phase of the agreement, which became effective on September 1, 2023, covers Fierce distribution in certain major markets, including Europe, Mexico and Australia. The second phase, which activated in February 2024, covers distribution in additional markets in Western Europe and Latin America, and may include other flankers of the Fierce family of products.

 

Roberto Cavalli

 

In July 2023, we closed a transaction agreement with Roberto Cavalli, whereby an exclusive and worldwide license was granted for the production and distribution of Roberto Cavalli brand perfumes and fragrance related products. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license became effective in July 2023 and will last for 6.5 years. We began shipping Roberto Cavalli perfumes and fragrance related products in February 2024.

 

Lacoste

 

In December 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted for the production and distribution of Lacoste brand perfumes and cosmetics. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license became effective in January 2024 and will last for 15 years. We began shipping Lacoste fragrances in January 2024.


Dunhill

 

The Dunhill fragrance license expired on September 30, 2023 and was not renewed. The Company had a twelve-month sell-off period during which it maintained the right to sell-off remaining Dunhill fragrance inventory, which is customary in the fragrance industry. As of September 30, 2024, all finished goods and components have been sold and we no longer carry any inventory related to Dunhill. 

 

Rochas Fashion

 

As a result of operational challenges faced by the Rochas Fashion business in prior years, we took a $2.4 million impairment charge and a $6.8 million impairment charge on our Rochas Fashion trademark in the first quarter of 2021 and the fourth quarter of 2022, respectively, resulting in a net book value for the trademark of $11.9 million. In 2023, the Rochas team underwent a strategic shift to take over their own brand operations, exiting contracts with manufacturers and distributors to make this new structure operational beginning in 2024. Management has reviewed and agreed with an independent expert's conclusion that the valuation based on this new business model would not require additional impairments as of December 31, 2023. There have been no triggering events through September 30, 2024 to require additional impairment analysis. 

Land and Building Acquisition - Headquarters in Paris

 

In April 2021, Interparfums SA, our 72% owned French Subsidiary, completed the acquisition of its headquarters at 10 rue de Solférino in the 7th arrondissement of Paris from the property developer. This is an office complex combining three buildings connected by two inner courtyards, and consists of approximately 40,000 total sq. ft.

 

The purchase price included the complete renovation of the site. As of September 30, 2024, $156 million (€139 million) of the purchase price, including approximately $3 million of acquisition costs, is included in property, equipment and leasehold improvements on the accompanying consolidated balance sheet. The purchase price has been allocated approximately $64.1 million (€57 million) to land and $91.9 million (€82 million) to the building. The building, which was delivered on February 28, 2022, includes the building structure, development of the property, façade waterproofing, general and technical installations and interior fittings that will be depreciated over a range of 7 to 50 years. The Company has elected to depreciate the building cost based on the useful lives of its components. 

 

The acquisition was financed by a 10-year €120 million (approximately $134.4 million) bank loan which bears interest at one-month Euribor plus 0.75%. Approximately €80 million of the variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1%.
v3.24.3
Recent Accounting Pronouncements:
 9 Months Ended
Sep. 30, 2024
Accounting Changes and Error Corrections [Abstract]  
Recent Accounting Pronouncements:
3. Recent Accounting Pronouncements:

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU updates reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance and allocate resources. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting this ASU on our disclosures.


In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and shall be applied on a prospective basis with the option to apply retrospectively. We are currently evaluating the impact of adopting this ASU on our disclosures.


There are no other recent accounting pronouncements issued but not yet adopted that would have a material effect on our consolidated financial statements.
v3.24.3
Inventories:
 9 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
Inventories:
4. Inventories:

 

Inventories consist of the following:

 

(In thousands)   September 30, 2024     December 31, 2023  
Raw materials and component parts   $ 152,302     $ 158,733  
Finished goods     260,456       213,126  
                 
    $ 412,758     $ 371,859  
v3.24.3
Fair Value Measurement:
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurement:
5. Fair Value Measurement:

 

The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.


            Fair Value Measurements at September 30, 2024  
    Total     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		     Significant Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  
Assets:                        
Short-term investments   $ 78,783     $ 8,940     $ 69,843     $ —  
Interest rate swaps     2,462       —       2,462       —  
Foreign currency forward exchange contracts not accounted for using hedge accounting

225


—


225


—
                                 
    $ 81,470     $ 8,940     $ 72,530     $ —  
Liabilities:















Foreign currency forward exchange contracts accounted for using hedge accounting

216


—


216


—



















$ 216

$ —

$ 216

$ —

 

            Fair Value Measurements at December 31, 2023  
    Total     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		     Significant Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  
Assets:                        
Short-term investments   $ 94,304     $ 12,868     $ 80,614     $ 822  
Interest rate swaps     3,909       —       3,909       —  
Foreign currency forward exchange contracts not accounted for using hedge accounting     359       —       359       —  
Foreign currency forward exchange contracts accounted for using hedge accounting     1,533       —       1,533       —  
                                 
    $ 100,105     $ 12,868     $ 86,415     $ 822  


The carrying amount of cash and cash equivalents, short-term investments including money market funds and marketable equity securities, accounts receivable, other receivables, accounts payable and accrued expenses approximate fair value due to the short terms to maturity of these instruments. The carrying amount of loans payable approximates fair value as the interest rates on the Company’s indebtedness approximate current market rates. The fair value of the Company’s long-term debt was estimated based on the current rates offered to companies for debt with the same remaining maturities and is approximately equal to its carrying value.


Foreign currency forward exchange contracts are valued based on quotations from financial institutions and the value of interest rate swaps is the discounted net present value of the swaps using third party quotes from financial institutions.
v3.24.3
Derivative Financial Instruments:
 9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments:
6. Derivative Financial Instruments:

 

The Company enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Before entering into a derivative transaction for hedging purposes, it is determined that a high degree of initial effectiveness exists between the change in value of the hedged item and the change in the value of the derivative instrument from movement in exchange rates. High effectiveness means that the change in the cash flows of the derivative instrument will effectively offset the change in the cash flows of the hedged item. The effectiveness of each hedged item is measured throughout the hedged period and is based on the dollar offset methodology and excludes the portion of the fair value of the foreign currency forward exchange contract attributable to the change in spot-forward difference which is reported in current period earnings. Any hedge ineffectiveness is also recognized as a gain or loss on foreign currency in the income statement. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued, and gains and losses accumulated in other comprehensive income are reclassified to earnings. If it is probable that the forecasted transaction will no longer occur, then any gains or losses accumulated in other comprehensive income are reclassified to current-period earnings. 

 

In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a €50 million (approximately $56 million) 4-year term loan with a variable interest rate. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2% per annum. This swap is a hedged derivative instrument and is therefore recorded at fair value and changes in fair value are reflected in other comprehensive income.

 

In connection with the April 2021 acquisition of the office building complex in Paris, €120 million (approximately $134.4 million) of the purchase price was financed through a 10-year term loan. The Company entered into interest rate swap contracts related to €80 million of the loan, effectively exchanging the variable interest rate to a fixed rate of approximately 1.1%. This derivative instrument is recorded at fair value and changes in fair value are reflected in the accompanying consolidated statements of income.

 

Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income (loss) and gains and losses in derivatives not designated as hedges are included in loss (gain) on foreign currency on the accompanying consolidated statements of income. Such gains and losses were immaterial for the three and nine months ended September 30, 2024 and 2023, respectively.

 

All derivative instruments are reported as either assets or liabilities on the consolidated balance sheet measured at fair value. The valuation of interest rate swaps is included in long-term debt on the accompanying consolidated balance sheet. The valuation of foreign currency forward exchange contracts at September 30, 2024, resulted in a net asset and is included in other current assets on the accompanying consolidated balance sheet.


At September 30, 2024, the Company had foreign currency contracts in the form of forward exchange contracts with notional amounts of approximately USD $21 million and GBP £7 million which all have maturities of less than one year. 
v3.24.3
Leases:
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
Leases:

7.

 Leases:

 

The Company leases its offices and warehouses, vehicles, and certain office equipment, substantially all of which are classified as operating leases. The Company currently has no material financing leases. The Company determines if an arrangement is a lease at inception. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term.

 

In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on the lease. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date for the location in which the lease is held in determining the present value of lease payments.

 

As of September 30, 2024, the weighted average remaining lease term was 4.2 years and the weighted average discount rate used to determine the operating lease liability was 3%. Rental expense related to operating leases was $1.6 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, as compared to $1.5 million and $4.5 million for the corresponding periods of the prior year. Operating lease payments included in operating cash flows totaled $4.4 million and $4.0 million for the nine months ended September 30, 2024 and 2023, respectively, and noncash additions to operating lease assets totaled $1.2 million and $5.7 million for the nine months ended September 30, 2024 and 2023, respectively.
v3.24.3
Share-Based Payments:
 9 Months Ended
Sep. 30, 2024
Equity:  
Share-Based Payments:
8. Share-Based Payments:

 

The Company maintains a stock option program for key employees, executives and directors. The plans, all of which have been approved by shareholder vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year term and vest over a four to five-year period. The fair value of shares vested during the nine months ended September 30, 2024 and 2023 aggregated $0.04 million and $0.10 million, respectively. Compensation cost, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period for the entire award. Forfeitures are estimated based on historic trends. It is generally our policy to issue new shares upon exercise of stock options. 

 

The following table sets forth information with respect to nonvested options for the nine months ended September 30, 2024:

 

    Number of Shares     Weighted Average Grant-Date Fair Value  
Nonvested options – beginning of period     122,100     $ 24.47  
Nonvested options granted     —       —  
Nonvested options vested or forfeited     (3,380 )   $ 12.02  
Nonvested options – end of period     118,720     $ 24.83  

 

Share-based payment expense decreased income before income taxes by $0.60 million and $1.77 million for the three and nine months ended September 30, 2024 respectively, as compared to $0.62 million and $1.89 million for the corresponding periods of the prior year, and decreased income attributable to Interparfums, Inc. by $0.4 million and $1.17 million for the three and nine months ended September 30, 2024 respectively, as compared to $0.41 million and $1.27 million for the corresponding periods of the prior year.

 

The following table summarizes stock option information as of September 30, 2024:

 

    Shares     Weighted Average
Exercise Price		  
             
Outstanding at January 1, 2024     308,970     $ 86.52  
Options forfeited     (380 )     73.09  
Options exercised     (24,920 )     69.39  
                 
Outstanding at September 30, 2024     283,670     $ 88.04  
                 
Options exercisable     164,950     $ 70.69  
Options available for future grants     537,745          

 

As of September 30, 2024, the weighted average remaining contractual life of options outstanding is 2.23 years (0.96 years for options exercisable); the aggregate intrinsic value of options outstanding and options exercisable is $12.6 million and $9.7 million, respectively; and unrecognized compensation cost related to stock options outstanding aggregated $2.2 million.

 

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the nine months ended September 30, 2024 and 2023 were as follows:

 

(In thousands)   September 30, 2024     September 30, 2023  
             
Cash proceeds from stock options exercised   $ 1,729     $ 5,523  
Tax benefits     272       900  
Intrinsic value of stock options exercised     1,721       6,135  

 

There were no options granted during the nine months ended September 30, 2024 and September 30, 2023.

 

Expected volatility is estimated based on historic volatility of the Company’s common stock. The expected term of the option is estimated based on historical data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors maintain its current payout ratio as a percentage of earnings.

 

In March 2022, Interparfums SA, our 72% owned French Subsidiary, approved a plan to grant an aggregate of 88,400 shares of its stock to all Interparfums SA employees and corporate officers having more than six months of employment at grant date, subject to certain corporate performance conditions. The shares, subject to adjustment for stock splits, will be distributed in June 2025.

 

The fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the Euronext on the date of grant. The estimated number of shares to be distributed of 103,409 has been determined taking into account employee turnover. The aggregate cost of the grant of approximately $4.2 million will be recognized as compensation cost on a straight-line basis over the requisite three and a quarter year service period.

In order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distributed or to be distributed pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA. As of September 30, 2024 the Company acquired 96,371 shares at an aggregate cost of $4.1 million.

 

All share purchases and issuances have been classified as equity transactions on the accompanying balance sheet. 
v3.24.3
Net Income Attributable to Inter Parfums, Inc. Common Shareholders:
 9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
Net Income Attributable to Inter Parfums, Inc. Common Shareholders:
9. Net Income Attributable to Interparfums, Inc. Common Shareholders:

 

Net income attributable to Interparfums, Inc. per common share (“basic EPS”) is computed by dividing net income attributable to Interparfums, Inc. by the weighted average number of shares outstanding. Net income attributable to Interparfums, Inc. per share assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding, plus the incremental shares outstanding assuming the exercise of dilutive stock options using the treasury stock method.

 

The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:


    Three months ended  
Nine months ended
(In thousands)   September 30,  
September 30,
    2024     2023  
2024

2023
Numerator:            





Net income attributable to Interparfums, Inc.   $ 62,259     $ 53,214  
$ 140,130

$ 142,234
Denominator:                







Weighted average shares     32,026       31,976  

32,030


32,000
Effect of dilutive securities:                







Stock options     240       148  

236


149
Denominator for diluted earnings per share     32,266       32,124  

32,266


32,149
                 







Earnings per share:                







Net income attributable to                







Interparfums, Inc. common shareholders:                







Basic   $ 1.94     $ 1.66  
$ 4.37

$ 4.44
Diluted   $  1.93     $  1.66  
$ 4.34

$ 4.42


Not included in the above computations are the effect of antidilutive potential common shares which consist of outstanding options to purchase 0.05 million shares of common stock for the three and nine months ended September 30, 2024. There were no antidilutive potential common shares outstanding for the three and nine months ended September 30, 2023.
v3.24.3
Segment and Geographic Areas:
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment and Geographic Areas:
10. Segment and Geographic Areas:

 

The Company manufactures and distributes one product line, fragrances and fragrance related products. The Company manages its business in two segments, European based operations and United States based operations. For European based operations, assets and business operations are primarily conducted in France, and include the results and assets of Interparfums Luxury Brands, Inc., located in the United States. For Unites States based operations, assets and business operations are primarily conducted in the United States, and include the results and assets of Interparfums Italia Srl, located in Italy. Both European based operations and United States based operations primarily represent the sale of prestige brand name fragrances.


Information on our operations by segments is as follows:

 

(In thousands)   Three Months Ended  
Nine Months Ended


September 30,

September 30,
    2024     2023  
2024

2023
Net sales:                







United States   $ 146,101     $ 134,469  
$ 362,059

$ 327,359
Europe     282,481       233,500  

739,454


661,577
Eliminations of intercompany sales     (3,953 )     —  

(10,692 )

—
                 







    $ 424,629     $ 367,969  
$ 1,090,821

$ 988,936
                 







Net income attributable to Interparfums, Inc.:                







United States   $ 24,263     $ 20,157  
$ 49,015

$ 46,067
Europe     39,869       33,057  

95,966


96,167
Eliminations     (1,873 )     —  

(4,851 )

—
    $ 62,259     $ 53,214  
$ 140,130

$ 142,234

 

Eliminations of intercompany sales relate to European based operations products sold to United States based operations. 


    September 30,     December 31,  
    2024     2023  
Total Assets:                
United States   $ 368,375     $ 344,341  
Europe     1,130,308       1,066,684  
Eliminations     (18,083 )     (41,696 )

 

   $ 1,480,600     $ 1,369,329  
v3.24.3
Insider Trading Arrangements
 9 Months Ended
Sep. 30, 2024
Trading Arrangements, by Individual [Table]  
Rule 10b5-1 Arrangement Adopted [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
v3.24.3
Inventories: (Tables)
 9 Months Ended
Sep. 30, 2024
Inventory Disclosure [Abstract]  
Inventories consist of the following:

Inventories consist of the following:

 

(In thousands)   September 30, 2024     December 31, 2023  
Raw materials and component parts   $ 152,302     $ 158,733  
Finished goods     260,456       213,126  
                 
    $ 412,758     $ 371,859  
v3.24.3
Fair Value Measurement: (Tables)
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.


            Fair Value Measurements at September 30, 2024  
    Total     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		     Significant Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  
Assets:                        
Short-term investments   $ 78,783     $ 8,940     $ 69,843     $ —  
Interest rate swaps     2,462       —       2,462       —  
Foreign currency forward exchange contracts not accounted for using hedge accounting

225


—


225


—
                                 
    $ 81,470     $ 8,940     $ 72,530     $ —  
Liabilities:















Foreign currency forward exchange contracts accounted for using hedge accounting

216


—


216


—



















$ 216

$ —

$ 216

$ —

 

            Fair Value Measurements at December 31, 2023  
    Total     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		     Significant Other
Observable
Inputs
(Level 2)		     Significant
Unobservable
Inputs
(Level 3)		  
Assets:                        
Short-term investments   $ 94,304     $ 12,868     $ 80,614     $ 822  
Interest rate swaps     3,909       —       3,909       —  
Foreign currency forward exchange contracts not accounted for using hedge accounting     359       —       359       —  
Foreign currency forward exchange contracts accounted for using hedge accounting     1,533       —       1,533       —  
                                 
    $ 100,105     $ 12,868     $ 86,415     $ 822  
v3.24.3
Share-Based Payments: (Tables)
 9 Months Ended
Sep. 30, 2024
Equity:  
The following table sets forth information with respect to nonvested options for the three months ended March 31, 2024:

The following table sets forth information with respect to nonvested options for the nine months ended September 30, 2024:

 

    Number of Shares     Weighted Average Grant-Date Fair Value  
Nonvested options – beginning of period     122,100     $ 24.47  
Nonvested options granted     —       —  
Nonvested options vested or forfeited     (3,380 )   $ 12.02  
Nonvested options – end of period     118,720     $ 24.83  
The following table summarizes stock option information as of March 31, 2024:

The following table summarizes stock option information as of September 30, 2024:

 

    Shares     Weighted Average
Exercise Price		  
             
Outstanding at January 1, 2024     308,970     $ 86.52  
Options forfeited     (380 )     73.09  
Options exercised     (24,920 )     69.39  
                 
Outstanding at September 30, 2024     283,670     $ 88.04  
                 
Options exercisable     164,950     $ 70.69  
Options available for future grants     537,745          
Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the three months ended March 31, 2024 and 2023 were as follows:

Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the nine months ended September 30, 2024 and 2023 were as follows:

 

(In thousands)   September 30, 2024     September 30, 2023  
             
Cash proceeds from stock options exercised   $ 1,729     $ 5,523  
Tax benefits     272       900  
Intrinsic value of stock options exercised     1,721       6,135  
v3.24.3
Net Income Attributable to Inter Parfums, Inc. Common Shareholders: (Tables)
 9 Months Ended
Sep. 30, 2024
Earnings Per Share [Abstract]  
The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:

The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:


    Three months ended  
Nine months ended
(In thousands)   September 30,  
September 30,
    2024     2023  
2024

2023
Numerator:            





Net income attributable to Interparfums, Inc.   $ 62,259     $ 53,214  
$ 140,130

$ 142,234
Denominator:                







Weighted average shares     32,026       31,976  

32,030


32,000
Effect of dilutive securities:                







Stock options     240       148  

236


149
Denominator for diluted earnings per share     32,266       32,124  

32,266


32,149
                 







Earnings per share:                







Net income attributable to                







Interparfums, Inc. common shareholders:                







Basic   $ 1.94     $ 1.66  
$ 4.37

$ 4.44
Diluted   $  1.93     $  1.66  
$ 4.34

$ 4.42
v3.24.3
Segment and Geographic Areas: (Tables)
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Information on our operations by segments is as follows:

Information on our operations by segments is as follows:

 

(In thousands)   Three Months Ended  
Nine Months Ended


September 30,

September 30,
    2024     2023  
2024

2023
Net sales:                







United States   $ 146,101     $ 134,469  
$ 362,059

$ 327,359
Europe     282,481       233,500  

739,454


661,577
Eliminations of intercompany sales     (3,953 )     —  

(10,692 )

—
                 







    $ 424,629     $ 367,969  
$ 1,090,821

$ 988,936
                 







Net income attributable to Interparfums, Inc.:                







United States   $ 24,263     $ 20,157  
$ 49,015

$ 46,067
Europe     39,869       33,057  

95,966


96,167
Eliminations     (1,873 )     —  

(4,851 )

—
    $ 62,259     $ 53,214  
$ 140,130

$ 142,234

 

Eliminations of intercompany sales relate to European based operations products sold to United States based operations. 


    September 30,     December 31,  
    2024     2023  
Total Assets:                
United States   $ 368,375     $ 344,341  
Europe     1,130,308       1,066,684  
Eliminations     (18,083 )     (41,696 )

 

   $ 1,480,600     $ 1,369,329  
v3.24.3
Recent Agreements: (Details Narrative)
€ in Millions, $ in Millions
 3 Months Ended 9 Months Ended
Dec. 31, 2022
USD ($)
Mar. 31, 2021
USD ($)
Sep. 30, 2024
USD ($)
Sep. 30, 2024
EUR (€)
Sep. 30, 2024
EUR (€)
Mar. 31, 2022
Apr. 30, 2021
ft²
Number
Business Acquisition [Line Items]              
Purchase price, period cost     $ 156.0 € 139      
Acquisition costs, period cost     $ 3.0        
Long-term debt, term 4 years   10 years   10 years   10 years
Long-term line of credit     $ 134.4   € 120    
Description of debt instrument interest rate terms     one-month Euribor plus 0.75% one-month Euribor plus 0.75%      
Debt instrument, face amount | €         € 80    
Variable interest rate     2.00%   2.00%    
Fixed interest rate     1.10%   1.10%    
Minimum [Member]              
Business Acquisition [Line Items]              
Depreciated over a range     7 years   7 years    
Maximum [Member]              
Business Acquisition [Line Items]              
Depreciated over a range     50 years   50 years    
Land [Member]              
Business Acquisition [Line Items]              
Purchase price, period cost     $ 64.1 € 57      
Building [Member]              
Business Acquisition [Line Items]              
Purchase price, period cost     $ 91.9 € 82      
Interparfums SA [Member]              
Business Acquisition [Line Items]              
Ownership percentage           72.00% 72.00%
Number of buildings | Number             3
Number of inner courtyards | Number             2
Area of Real Estate Property | ft²             40,000
Van Cleef and Arpels [Member]              
Business Acquisition [Line Items]              
Description of recent agreement     In 2006, Van Cleef & Arpels and Interparfums SA signed a 12-year worldwide license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels brand name, which was subsequently extended for a further six years until December 31, 2024. Discussions have been underway since 2023 with a view to renewing the license agreement. The new agreement will strengthen the selective distribution of Van Cleef & Arpels fragrances worldwide. The license is to be renewed for an additional 9-year term, beginning January 1, 2025. In 2006, Van Cleef & Arpels and Interparfums SA signed a 12-year worldwide license agreement to manufacture and distribute perfumes and related products under the Van Cleef & Arpels brand name, which was subsequently extended for a further six years until December 31, 2024. Discussions have been underway since 2023 with a view to renewing the license agreement. The new agreement will strengthen the selective distribution of Van Cleef & Arpels fragrances worldwide. The license is to be renewed for an additional 9-year term, beginning January 1, 2025.      
Roberto Cavalli [Member]              
Business Acquisition [Line Items]              
Description of recent agreement     The license became effective in July 2023 and will last for 6.5 years. The license became effective in July 2023 and will last for 6.5 years.      
Lacoste Member              
Business Acquisition [Line Items]              
Description of recent agreement     The license became effective in January 2024 and will last for 15 years The license became effective in January 2024 and will last for 15 years      
Rochas Fashion [Member] | Trademarks [Member]              
Business Acquisition [Line Items]              
Impairment of intangible assets $ 6.8 $ 2.4          
Net book value for finite-lived Intangible assets     $ 11.9        
v3.24.3
Inventories consist of the following: (Details) - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Inventory Disclosure [Abstract]    
Raw materials and component parts $ 152,302 $ 158,733
Finished goods 260,456 213,126
Inventories $ 412,758 $ 371,859
v3.24.3
The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. (Details) - Fair Value, Recurring [Member] - USD ($)
$ in Thousands
Sep. 30, 2024
Dec. 31, 2023
Assets:    
Short-term investments $ 78,783 $ 94,304
Interest rate swaps 2,462 3,909
Foreign currency forward exchange contracts not accounted for using hedge accounting 225 359
Foreign currency forward exchange contracts accounted for using hedge accounting   1,533
Total assets at fair value 81,470 100,105
Liabilities:    
Foreign currency forward exchange contracts accounted for using hedge accounting 216  
Total liabilities at fair value 216  
Fair Value, Inputs, Level 1 [Member]    
Assets:    
Short-term investments 8,940 12,868
Interest rate swaps 0 0
Foreign currency forward exchange contracts not accounted for using hedge accounting 0 0
Foreign currency forward exchange contracts accounted for using hedge accounting   0
Total assets at fair value 8,940 12,868
Liabilities:    
Foreign currency forward exchange contracts accounted for using hedge accounting 0  
Total liabilities at fair value 0  
Fair Value, Inputs, Level 2 [Member]    
Assets:    
Short-term investments 69,843 80,614
Interest rate swaps 2,462 3,909
Foreign currency forward exchange contracts not accounted for using hedge accounting 225 359
Foreign currency forward exchange contracts accounted for using hedge accounting   1,533
Total assets at fair value 72,530 86,415
Liabilities:    
Foreign currency forward exchange contracts accounted for using hedge accounting 216  
Total liabilities at fair value 216  
Fair Value, Inputs, Level 3 [Member]    
Assets:    
Short-term investments 0 822
Interest rate swaps 0 0
Foreign currency forward exchange contracts not accounted for using hedge accounting 0 0
Foreign currency forward exchange contracts accounted for using hedge accounting   0
Total assets at fair value 0 $ 822
Liabilities:    
Foreign currency forward exchange contracts accounted for using hedge accounting 0  
Total liabilities at fair value $ 0  
v3.24.3
Derivative Financial Instruments: (Details Narrative)
€ in Millions, £ in Millions, $ in Millions
 9 Months Ended
Sep. 30, 2024
USD ($)
Sep. 30, 2024
GBP (£)
Dec. 31, 2022
USD ($)
Dec. 31, 2022
EUR (€)
Apr. 30, 2021
USD ($)
Apr. 30, 2021
EUR (€)
Derivative Instruments, Gain (Loss) [Line Items]            
Loan amount     $ 56.0 € 50 $ 134.4 € 120
Long-term debt, term 10 years 10 years 4 years 4 years 10 years 10 years
Derivative swap interest rate     2.00% 2.00% 1.10% 1.10%
Interest Rate Swap [Member]            
Derivative Instruments, Gain (Loss) [Line Items]            
Loan amount | €           € 80
Foreign Exchange Contract [Member]            
Derivative Instruments, Gain (Loss) [Line Items]            
Loan amount | £   £ 7        
Forward exchange contracts | $ $ 21.0          
Maturity of foreign currency 1 year          
v3.24.3
Leases: (Details Narrative) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Leases [Abstract]        
Operating lease, weighted average remaining lease term 4 years 2 months 12 days   4 years 2 months 12 days  
Operating lease, weighted average discount rate, percent 3.00%   3.00%  
Operating leases, rent expense $ 1.6 $ 1.5 $ 4.9 $ 4.5
Operating Lease, Payments     4.4 4.0
Noncash additions to operating lease assets     $ 1.2 $ 5.7
v3.24.3
The following table sets forth information with respect to nonvested options for the six months ended June 30, 2024: (Details)
 9 Months Ended
Sep. 30, 2024
$ / shares
shares
Equity:  
Nonvested options - beginning of year | shares 122,100
Weighted average grant date fair value, beginning of year | $ / shares $ 24.47
Nonvested options granted | shares 0
Weighted average grant date fair value, granted | $ / shares $ 0
Nonvested options vested or forfeited | shares (3,380)
Weighted average grant date fair value, vested or forfeited | $ / shares $ 12.02
Nonvested options - end of year | shares 118,720
Weighted average grant date fair value, end of year | $ / shares $ 24.83
v3.24.3
The following table summarizes stock option information as of June 30, 2024: (Details)
 9 Months Ended
Sep. 30, 2024
$ / shares
shares
Equity:  
Options shares under option - beginning of year 308,970
Weighted average exercise price shares under option - beginning of year | $ / shares $ 86.52
Options forfeited (380)
Weighted average exercise price options forfeited | $ / shares $ 73.09
Options exercised (24,920)
Weighted average exercise price options exercised | $ / shares $ 69.39
Options shares under option - end of year 283,670
Weighted average exercise price shares under option - end of year | $ / shares $ 88.04
Options exercisable 164,950
Weighted average exercise price options exercisable | $ / shares $ 70.69
Options available for future grants 537,745
v3.24.3
Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the six months ended June 30, 2024 and 2023 were as follows: (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Equity:    
Cash proceeds from stock options exercised $ 1,729 $ 5,523
Tax benefits 272 900
Intrinsic value of stock options exercised $ 1,721 $ 6,135
v3.24.3
Share-Based Payments: (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Mar. 31, 2022
Apr. 30, 2021
Subsidiary or Equity Method Investee [Line Items]            
Share-based payment expense $ 600 $ 620 $ 1,768 $ 1,887    
Share-based payment arrangement, expense 400 $ 410 $ 1,170 $ 1,270    
Weighted average remaining contractual life of options outstanding (in years)     2 years 2 months 23 days      
Weighted average remaining contractual life of options exercisable (in years)     11 months 15 days      
Aggregate intrinsic value of options outstanding and options outstanding 12,600   $ 12,600      
Aggregate intrinsic value of options outstanding and options exercisable 9,700   9,700      
Unrecognized compensation cost $ 2,200   $ 2,200      
Options granted     0 0    
Interparfums SA [Member]            
Subsidiary or Equity Method Investee [Line Items]            
Ownership percentage         72.00% 72.00%
Interparfums SA Subsidiary [Member]            
Subsidiary or Equity Method Investee [Line Items]            
Recognized as compensation cost     $ 4,200      
Interparfums SA Subsidiary [Member] | Employees [Member]            
Subsidiary or Equity Method Investee [Line Items]            
Number of share distributed     103,409      
Recognized as compensation cost     $ 4,100      
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized 96,371   96,371   88,400  
Equity Option [Member]            
Subsidiary or Equity Method Investee [Line Items]            
Fair value of shares vested     $ 40 $ 100    
Minimum [Member] | Equity Option [Member]            
Subsidiary or Equity Method Investee [Line Items]            
Options vesting period     4 years      
Maximum [Member] | Equity Option [Member]            
Subsidiary or Equity Method Investee [Line Items]            
Options vesting period     5 years      
v3.24.3
The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows: (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2024
Sep. 30, 2023
Numerator:        
Net income attributable to Interparfums, Inc. (in dollars) $ 62,259 $ 53,214 $ 140,130 $ 142,234
Denominator:        
Weighted average shares 32,026 31,976 32,030 32,000
Effect of dilutive securities:        
Stock options 240 148 236 149
Denominator for diluted earnings per share 32,266 32,124 32,266 32,149
Net income attributable to Interparfums, Inc. common shareholders:        
Basic (in dollars per share) $ 1.94 $ 1.66 $ 4.37 $ 4.44
Diluted (in dollars per share) $ 1.93 $ 1.66 $ 4.34 $ 4.42
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 50,000.00 0 50,000.00 0
v3.24.3
Information on our operations by segments is as follows: (Details)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Sep. 30, 2024
USD ($)
Sep. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Revenues from External Customers and Long-Lived Assets [Line Items]          
Net sales $ 424,629 $ 367,969 $ 1,090,821 $ 988,936  
Net income attributable to Inter Parfums, Inc 62,259 53,214 140,130 142,234  
Total assets 1,480,600   $ 1,480,600   $ 1,369,329
Number of Product Lines     1    
Number of Operating Segments     2    
UNITED STATES          
Revenues from External Customers and Long-Lived Assets [Line Items]          
Net sales 146,101 134,469 $ 362,059 327,359  
Net income attributable to Inter Parfums, Inc 24,263 20,157 49,015 46,067  
Total assets 368,375   368,375   344,341
Europe [Member]          
Revenues from External Customers and Long-Lived Assets [Line Items]          
Net sales 282,481 233,500 739,454 661,577  
Net income attributable to Inter Parfums, Inc 39,869 33,057 95,966 96,167  
Total assets 1,130,308   1,130,308   1,066,684
Eliminations [Member]          
Revenues from External Customers and Long-Lived Assets [Line Items]          
Net sales (3,953) 0 (10,692) 0  
Net income attributable to Inter Parfums, Inc (1,873) $ 0 (4,851) $ 0  
Total assets $ (18,083)   $ (18,083)   $ (41,696)
Interparfums (NASDAQ:IPAR)
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