UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(MARK ONE)
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended |
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.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of Principal Executive Offices) (Zip Code) |
| (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 | ||
| |
|
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
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
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).
| 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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
At
May 5, 2025, there were
INTERPARFUMS, INC. AND SUBSIDIARIES
INDEX
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, 2024, included in our annual report filed on Form 10-K.
The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the entire fiscal year.
INTERPARFUMS, INC. AND SUBSIDIARIES
(In thousands except share and per share data)
(Unaudited)
| ASSETS | ||||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Receivables, other | ||||||||
| Other current assets | ||||||||
| Income taxes receivable | ||||||||
| Total current assets | ||||||||
| Property, equipment and leasehold improvements, net | ||||||||
| Right-of-use assets, net | ||||||||
| Trademarks, licenses and other intangible assets, net | ||||||||
| Deferred tax assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Loans payable - banks | $ | $ | ||||||
| Current portion of long-term debt | ||||||||
| Current portion of lease liabilities | ||||||||
| Accounts payable – trade | ||||||||
| Accrued expenses | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Long–term debt, less current portion | ||||||||
| Lease liabilities, less current portion | ||||||||
| Equity: | ||||||||
| Interparfums, Inc. shareholders’ equity: | ||||||||
| Preferred stock, $ |
||||||||
| Common
stock, $ |
||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||||
| Treasury stock, at cost, |
( |
) | ( |
) | ||||
| Total Interparfums, Inc. shareholders’ equity | ||||||||
| Noncontrolling interest | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
See notes to consolidated financial statements.
INTERPARFUMS, INC. AND SUBSIDIARIES
(In thousands except per share data)
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | $ | $ | ||||||
| Cost of sales | ||||||||
| Gross margin | ||||||||
| Selling, general and administrative expenses | ||||||||
| Income from operations | ||||||||
| Other expenses (income): | ||||||||
| Interest expense | ||||||||
| Loss (gain) on foreign currency | ( |
) | ||||||
| Interest and investment income | ( |
) | ( |
) | ||||
| Other (income) loss | ( |
) | ||||||
| ( |
) | |||||||
| Income before income taxes | ||||||||
| Income taxes | ||||||||
| Net income | ||||||||
| Less: Net income attributable to the noncontrolling interest | ||||||||
| Net income attributable to Interparfums, Inc. | $ | $ | ||||||
| Earnings per share: | ||||||||
| Net income attributable to Interparfums, Inc. common shareholders: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average number of shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Dividends declared per share | $ | $ | ||||||
See notes to consolidated financial statements.
INTERPARFUMS, INC. AND SUBSIDIARIES
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Comprehensive income: | ||||||||
| Net income | $ | $ | ||||||
| Other comprehensive income: | ||||||||
| Net derivative instrument gain (loss), net of tax | ( |
) | ||||||
| Transfer from OCI into earnings | ||||||||
| Pension benefits, net of tax | ( |
) | ||||||
| Translation adjustments, net of tax | ( |
) | ||||||
| Comprehensive income | ||||||||
| Comprehensive income attributable to the noncontrolling interests: | ||||||||
| Net income | ||||||||
| Other comprehensive income: | ||||||||
| Net derivative instrument gain (loss), net of tax | ( |
) | ||||||
| Pension benefits, net of tax | ( |
) | ||||||
| Translation adjustments, net of tax | ( |
) | ||||||
| Comprehensive income attributable to the noncontrolling interests | ||||||||
| Comprehensive income attributable to Interparfums, Inc. | $ | $ | ||||||
See notes to consolidated financial statements.
INTERPARFUMS, INC. AND SUBSIDIARIES
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Common stock, beginning and end of period | $ | $ | ||||||
| Additional paid-in capital, beginning of period | ||||||||
| Shares issued upon exercise of stock options | ||||||||
| Share-based compensation | ||||||||
| Transfer of subsidiary shares purchased | ||||||||
| Additional paid-in capital, end of period | ||||||||
| Retained earnings, beginning of period | ||||||||
| Net income | ||||||||
| Dividends | ( |
) | ( |
) | ||||
| Share-based compensation | ||||||||
| Retained earnings, end of period | ||||||||
| Accumulated other comprehensive loss, beginning of period | ( |
) | ( |
) | ||||
| Foreign currency translation adjustment, net of tax | ( |
) | ||||||
| Transfer from other comprehensive income into earnings | ||||||||
| Pension benefits, net of tax | ( |
) | ||||||
| Net derivative instrument gain (loss), net of tax | ( |
) | ||||||
| Accumulated other comprehensive loss, end of period | ( |
) | ( |
) | ||||
| Treasury stock, beginning and end of period | ( |
) | ( |
) | ||||
| Noncontrolling interest, beginning of period | ||||||||
| Net income | ||||||||
| Foreign currency translation adjustment, net of tax | ( |
) | ||||||
| Pension benefits, net of tax | ( |
) | ||||||
| Net derivative instrument gain (loss), net of tax | ( |
) | ||||||
| Share-based compensation | ||||||||
| Transfer of subsidiary shares purchased | ( |
) | ||||||
| Dividends | ( |
) | ||||||
| Noncontrolling interest, end of period | ||||||||
| Total equity | $ | $ | ||||||
See notes to consolidated financial statements.
| Page 5 |
INTERPARFUMS, INC. AND SUBSIDIARIES
(In thousands)
(Unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision for doubtful accounts | ( |
) | ( |
) | ||||
| Noncash stock compensation | ||||||||
| Share of income of equity investment | ( |
) | ||||||
| Noncash lease expense | ||||||||
| Deferred tax provision | ( |
) | ||||||
| Change in fair value of derivatives | ( |
) | ( |
) | ||||
| Changes in: | ||||||||
| Accounts receivable | ( |
) | ( |
) | ||||
| Inventories | ( |
) | ( |
) | ||||
| Other assets | ( |
) | ||||||
| Operating lease liabilities | ( |
) | ( |
) | ||||
| Accounts payable and accrued expenses | ( |
) | ( |
) | ||||
| Income taxes, net | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of short-term investments | ( |
) | ( |
) | ||||
| Proceeds from sale of short-term investments | ||||||||
| Purchases of property, equipment and leasehold improvements | ( |
) | ( |
) | ||||
| Payment for intangible assets acquired | ( |
) | ( |
) | ||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Repayment of (proceeds from) loans payable, bank | ( |
) | ||||||
| Repayment of long-term debt | ( |
) | ( |
) | ||||
| Proceeds from exercise of options | ||||||||
| Dividends paid | ( |
) | ( |
) | ||||
| Dividends paid to noncontrolling interest | ( |
) | ||||||
| Net cash used in financing activities | ( |
) | ( |
) | ||||
| Effect of exchange rate changes on cash | ( |
) | ||||||
|
Net decrease in cash and cash equivalents |
( |
) | ( |
) | ||||
| Cash and cash equivalents - beginning of period | ||||||||
| Cash and cash equivalents - end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | ||||||||
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, 2024.
| 2. | Recent Agreements: |
Annick Goutal
In March 2025, we announced that our
Coach
In 2015, Coach and Interparfums SA signed an exclusive worldwide license agreement for the creation, the manufacturing and the distribution of fragrances under the Coach brand until June 30, 2026. In March 2025, the license agreement was renewed for an additional
Abercrombie & Fitch and Hollister
In March 2025, we expanded our Fierce distribution agreement, which now allows for a global distribution of the iconic Fierce fragrance line that either party may terminate on
Off-White
In December 2024, we announced that our
Van Cleef & Arpels
In 2006, Van Cleef & Arpels and Interparfums SA signed a
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
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
| Page 7 |
INTERPARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
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 we took a $
| 3. | Recent Accounting Pronouncements: |
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-04. The ASU requires, among other things, more detailed disclosures about types of expenses in commonly presented expense captions such as cost of sales and selling, general and administrative expenses and is intended to improve the disclosures about an entity's expenses including purchases of inventory, employee compensation, depreciation and intangible asset amortization. ASU 2024-03 will also require the Company to disclose both the amount and the Company's definition of selling expenses. The guidance, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods for fiscal years beginning after December 15, 2027, on a prospective or 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) | March 31, 2025 | December 31, 2024 | ||||||
| Raw materials and component parts | $ | $ | ||||||
| Finished goods | ||||||||
| $ | $ | |||||||
| Page 8 |
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 March 31, 2025 | ||||||||||||||||
| 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 | $ | $ | $ | $ | ||||||||||||
| Interest rate swaps | ||||||||||||||||
| Foreign currency forward exchange contracts not accounted for using hedge accounting | ||||||||||||||||
| Foreign currency forward exchange contracts accounted for using hedge accounting | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Fair Value Measurements at December 31, 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 | $ | $ | $ | $ | ||||||||||||
| Interest rate swaps | ||||||||||||||||
| Total Assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Foreign currency forward exchange contracts not accounted for using hedge accounting | ||||||||||||||||
| Foreign currency forward exchange contracts accounted for using hedge accounting | ||||||||||||||||
| Total Liabilities | $ |
|
$ | $ | $ | |||||||||||
| 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 €
In
connection with the April 2021 acquisition of the office building complex in Paris, €
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 loss (gain) on foreign currency on the accompanying consolidated statements of income. Such gains and losses were immaterial for the three months ended March 31, 2025 and 2024, 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 March 31, 2025, resulted in a net asset and is included in other current assets on the accompanying consolidated balance sheet.
At March 31, 2025, the Company had foreign currency contracts in the form of forward exchange contracts with notional amounts of approximately USD $
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 March 31, 2025, the weighted average remaining lease term was
| 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 -year term and vest over a to -year period. The fair value of shares vested during the three months ended March 31, 2025 and 2024 aggregated $
| Number of Shares | Weighted Average Grant-Date Fair Value | |||||||
| Nonvested options – beginning of period | $ | |||||||
| Nonvested options granted | ||||||||
| Nonvested options vested or forfeited | ( |
) | $ | |||||
| Nonvested options – end of period | $ | |||||||
INTERPARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Share-based payment expense decreased income before income taxes by $
| Shares | Weighted Average Exercise Price |
|||||||
| Outstanding at January 1, 2025 | $ | |||||||
| Options forfeited | ( |
) | ||||||
| Options exercised | ( |
) | ||||||
| Outstanding at March 31, 2025 | $ | |||||||
| Options exercisable | $ | |||||||
| Options available for future grants | ||||||||
As of March 31, 2025, the weighted average remaining contractual life of options outstanding is
| (In thousands) | March 31, 2025 | March 31, 2024 | ||||||
| Cash proceeds from stock options exercised | $ | $ | ||||||
| Tax benefits | ||||||||
| Intrinsic value of stock options exercised | ||||||||
There were
Expected volatility is estimated based on the 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
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
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 March 31, 2025 the Company acquired
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.
| Three months ended | ||||||||
| (In thousands) | March 31, | |||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net income attributable to Interparfums, Inc. | $ | $ | ||||||
| Denominator: | ||||||||
| Weighted average shares | ||||||||
| Effect of dilutive securities: | ||||||||
| Stock options | ||||||||
| Denominator for diluted earnings per share | ||||||||
| Earnings per share: | ||||||||
| Net income attributable to | ||||||||
| Interparfums, Inc. common shareholders: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
Not included in the above computations are the effect of antidilutive potential common shares which consist of outstanding options to purchase
INTERPARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
| 10. | Segment and Geographic Areas: |
The Company manufactures and distributes
Information on the Company’s operations by segments is as follows:
| Three months ended March 31, 2025 | ||||||||||||
|
United States based operations |
European based operations |
Total | ||||||||||
| Net sales | $ | $ | $ | |||||||||
| Eliminations (a) | ( |
) | ( |
) | ||||||||
| Less: (b) | ||||||||||||
| Cost of sales | ||||||||||||
| Eliminations (a) | ( |
) | ||||||||||
| Segment gross margin | ||||||||||||
| Less: (b) | ||||||||||||
| Advertising and Promotion | ||||||||||||
| Employee related costs | ||||||||||||
| Royalties | ||||||||||||
| Other segment items (c) | ||||||||||||
| Segment income from operations | $ | $ | $ | |||||||||
| Reconciliation: |
||||||||||||
| Interest expense |
||||||||||||
| Loss on foreign currency | ||||||||||||
| Interest and investment income | ( |
) | ||||||||||
| Other income | ( |
) | ||||||||||
| Income before income taxes | $ | |||||||||||
| Three months ended March 31, 2024 | ||||||||||||
|
United States based operations |
European based operations |
Total | ||||||||||
| Net sales | $ | $ | $ | |||||||||
| Eliminations (a) | ( |
) | ( |
) | ||||||||
| Less: (b) | ||||||||||||
| Cost of sales | ||||||||||||
| Eliminations (a) | ( |
) | ||||||||||
| Segment gross margin | ||||||||||||
| Less: (b) | ||||||||||||
| Advertising and Promotion | ||||||||||||
| Employee related costs | ||||||||||||
| Royalties | ||||||||||||
| Other segment items (c) | ||||||||||||
| Segment income from operations | $ | $ | $ | |||||||||
| Reconciliation: |
||||||||||||
| Interest expense |
||||||||||||
| Gain on foreign currency | ( |
) | ||||||||||
| Interest and investment income | ( |
) | ||||||||||
| Other expense | ||||||||||||
| Income before income taxes | $ | |||||||||||
| (a) | |||||||||||||
| (b) | |||||||||||||
| (c) | |||||||||||||
Other segment disclosures:
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net income attributable to Interparfums, Inc.: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Eliminations | ( |
) | ( |
) | ||||
| $ | $ | |||||||
| Depreciation and amortization expense: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| $ | $ | |||||||
| Interest and investment income: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Eliminations | ( |
) | ||||||
| $ | $ | |||||||
| Interest expense: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Eliminations | ( |
) | ||||||
| $ | $ | |||||||
| Income tax expense: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Eliminations | ( |
) | ( |
) | ||||
| $ | $ | |||||||
| Additions to long-lived assets(a): | ||||||||
| United States | $ |
|
$ | |||||
| Europe | ||||||||
| $ | $ | |||||||
(a)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Total Assets: | ||||||||
| United States | $ | $ | ||||||
| Europe | ||||||||
| Eliminations | ( |
) | ( |
) | ||||
|
|
$ | $ | ||||||
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, 2024, 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 72% and 70% of net sales for the three months ended March 31, 2025 and 2024, 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 28% and 30% of net sales for the three months ended March 31, 2025 and 2024, 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, Emanuel 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, Coach, Montblanc, GUESS, Lacoste, Donna Karan/DKNY, and Ferragamo brand names.
As a percentage of net sales, product sales for the Company’s largest brands represented 76% and 74%, respectively, with a split by brand as follows:
|
Three Months Ended March 31, | ||||||||
| 2025 |
2024 | |||||||
| Jimmy Choo | 19 | % | 15 | % | ||||
| Coach | 16 | % | 15 | % | ||||
| Montblanc | 14 | % | 18 | % | ||||
| GUESS | 10 | % | 10 | % | ||||
| Lacoste | 8 | % | 6 | % | ||||
| Donna Karan/DKNY | 6 | % | 6 | % | ||||
| Ferragamo | 3 | % | 3 | % | ||||
| Page 17 |
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 approximately 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 March 31, 2025.
Discussion of Critical Accounting Policies
Information regarding our critical accounting policies can be found in our 2024 Annual Report on Form 10-K filed with the SEC.
| Page 18 |
INTERPARFUMS, INC. AND SUBSIDIARIES
Results of Operations
Three Months Ended March 31, 2025 as Compared to the Three Months Ended March 31, 2024
Net Sales:
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| (in millions) | 2025 | 2024 | % Change | |||||||||
| European based product sales | $ | 247.8 | $ | 231.0 | 7 | % | ||||||
| United States based product sales | 94.3 | 95.8 | (1) | % | ||||||||
| Eliminations | (3.3 | ) | (2.8 | ) | 21 | % | ||||||
| $ | 338.8 | $ | 324.0 | 5 | % | |||||||
Net sales for the three months ended March 31, 2025 increased 5% from the three months ended March 31, 2024. At comparable foreign currency exchange rates, net sales increased 6% from the first quarter of 2024. The average dollar/euro exchange rate for the current first quarter was 1.05 compared to 1.09 in the first quarter of 2024.
For European based operations, sales increased 7% compared to the corresponding period of the prior year, driven by Jimmy Choo, Coach, and Lacoste, which grew by 36%, 11%, and 30%, respectively, respectively, compared to the corresponding period of the prior year. These increases were driven by continued strong performance for the I Want Choo and Jimmy Choo Man franchises, the introduction of Coach Man Extreme, and strong demand for Lacoste as the brand entered its second year under our management. Sales of Montblanc declined by 16%, which was driven by the substantial increase in sales in the first quarter of 2024 following the debut of Legend Blue. Sales are expected to increase through the balance of 2025 with the introduction of Montblanc Explorer Extreme later this year.
Sales by our United States based operations grew from an organic perspective 3% of a high 2024 base when first quarter organic sales expanded by 11%. Overall, on a reported basis, sales declined by 1% in the first quarter of 2025 compared to the corresponding period of the prior year, as a result of the discontinuation of the Dunhill license which had a 4% negative impact. Donna Karan/DKNY fragrance sales rose by 5% resulting from the continued strength of our Cashmere Mist franchise and MCM sales grew by 17% with the rollout of the MCM Collection. Following the start of its fragrance distribution in February 2024, Roberto Cavalli delivered a 28% increase in net sales. Sales of GUESS declined slightly during the quarter off a very high base in first quarter of 2024 when sales grew by 21%.
The first quarter growth was ahead of expectations, and we are confident in our future as we look forward to executing our plans for the remainder of 2025. A new blockbuster for Ferragamo, Fiamma, debuted at the end of March 2025 and a new blockbuster, Roberto Cavalli Serpentine, will launch in the second quarter. We have a large number of brand extensions across many of our brands launching throughout the year, including a new flankers for Coach Woman, Lacoste L.12.12 and Original in the second quarter and a new flanker for I Want Choo in the second half of 2025. Additionally, extensions are set to debut for Donna Karan Cashmere Collection, GUESS Bella Vita, and DKNY 24/7. While the pace of growth in the fragrance 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 19 |
INTERPARFUMS, INC. AND SUBSIDIARIES
| Net Sales to Customers by Region | Three Months Ended | |||||||
| (In millions) | March 31, | |||||||
| 2025 | 2024 | |||||||
| North America | $ | 123.0 | $ | 108.1 | ||||
| Western Europe | 86.2 | 85.1 | ||||||
| Asia/Pacific | 50.3 | 51.8 | ||||||
| Central and South America | 31.0 | 34.4 | ||||||
| Middle East and Africa | 22.7 | 27.1 | ||||||
| Eastern Europe | 25.6 | 17.5 | ||||||
| $ | 338.8 | $ | 324.0 | |||||
In the three months ended March 31, 2025, net sales in our largest market, North America, rose 14% as compared to the prior year period, followed by an increase in the Western Europe of 1%. Our sales in Asia/Pacific decreased slightly by 3% driven by a higher base from 2024 in Australia. Our net sales in Eastern Europe were also robust, up 46% in the three months ended March 31, 2025 as compared to the prior year period where we faced temporary sourcing constraints. Central and South America net sales declined 10%, also off a high base in 2024 when the region grew 31%. Middle East and Africa net sales declined 16% due to macroeconomic challenges and a disproportionate impact from the exit of the Dunhill license due to its significant presence there.
| Gross Profit Margin | Three Months Ended | |||||||
| (in millions) | March 31, | |||||||
| 2025 |
2024 | |||||||
| European based operations | ||||||||
| Net sales | $ | 247.8 | $ | 231.0 | ||||
| Cost of sales | 85.4 | 83.2 | ||||||
| Gross profit margin | $ | 162.4 | $ | 147.8 | ||||
| Gross profit margin as a percentage of net sales | 65.5 | % | 64.0 | % | ||||
|
United States based operations |
||||||||
| Net sales | $ | 94.3 | $ | 95.8 | ||||
| Cost of sales | 38.9 | 39.6 | ||||||
| Gross profit margin | $ | 55.4 | $ | 56.2 | ||||
| Gross profit margin as a percentage of net sales | 58.7 | % | 58.7 | % | ||||
The Company’s gross profit margin as a percentage of net sales was 63.7% for the three months ended March 31, 2025 as compared to 62.5% for the corresponding period of the prior year. The increase in the three months ended March 31, 2025 as compared to the prior year period was driven by favorable segment mix in the current year.
For European based operations, gross profit margin as a percentage of net sales was 65.5% for the three months ended March 31, 2025, respectively, as compared to 64.0% for the corresponding period of the prior year. European based operations were positively impacted by brand and channel mix during the three months ended March 31, 2025 as compared to the prior year period.
| Page 20 |
INTERPARFUMS, INC. AND SUBSIDIARIES
For United States based operations, gross profit margin as a percentage of net sales remained flat at 58.7% for the three months ended March 31, 2025 and 2024 due to consistent brand and channel mix.
Generally, we do not bill customers for shipping and handling costs, which 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 sales.
| Selling, general and administrative expenses |
Three Months Ended |
|||||||
| (In millions) | March 31, | |||||||
| 2025 | 2024 | |||||||
|
European based operations |
||||||||
| Selling, general and administrative expenses | $ | 96.0 | $ | 90.4 | ||||
| Selling, general and administrative expenses as a percentage of net sales | 38.7 | % | 39.1 | % | ||||
| United States based operations | ||||||||
| Selling, general and administrative expenses | $ | 44.9 | $ | 44.0 | ||||
| Selling, general and administrative expenses as a percentage of net sales | 47.6 | % | 46.0 | % | ||||
The Company’s selling, general and administrative expenses as a percentage of net sales were 41.6% for the three months ended March 31, 2025 as compared to 41.5% for the three months ended March 31, 2024. The percentage of net sales remained relatively flat from the prior year period as promotional and advertising spending increased as a percentage of net sales by 0.3%, offset by scale benefits related to other fixed selling, general and administrative items which decreased selling, general and administrative expenses as a percentage of net sales by 0.2%.
For European based operations, selling, general and administrative expenses increased 6.2% for the three months ended March 31, 2025 as compared to the corresponding period of the prior year, and represented 38.7% of net sales for the three months ended March 31, 2025, as compared to 39.1% for the three months ended March 31, 2024. The decrease in selling, general and administrative expenses as a percentage of net sales resulted from a 0.3% reduction related to scale benefits related to fixed selling, general and administrative items, a 0.2% reduction related to royalty expense due to a favorable change in brand mix, partially offset by an increase of 0.1% related to higher advertising and promotional expenditures. For United States based operations, selling, general and administrative expenses increased 2.1% for the three months ended March 31, 2025, as compared to the corresponding period of the prior year, and represented 47.6% of net sales for the three months ended March 31, 2025, as compared to 46.0% for the three months ended March 31, 2024, respectively. The increase in selling, general and administrative expenses as a percentage of net sales was largely driven by the annualization impact of the investment in infrastructure and headcount made throughout 2024 to support the growth of the business leading to increased employee related costs as percentage of net sales of 1.7% as well as increased promotional and advertising spending as a percentage of net sales of 0.7%. These increases were offset by efficiencies related to other fixed selling, general and administrative items which decreased selling, general and administrative expenses as a percentage of sales by 0.7%.
Promotion and advertising included in selling, general and administrative expenses aggregated $51.5 million for the three months ended March 31, 2025, as compared to $48.3 million for the corresponding period of the prior year and represented 15.2% of net sales for the three months ended March 31, 2025, as compared to 14.9% for the corresponding period 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. As such, the Company is focused on increasing promotional and advertising spending to support the continued success of our brands. Additionally, we 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 21 |
INTERPARFUMS, INC. AND SUBSIDIARIES
Royalty expense included in selling, general and administrative expenses aggregated $28.1 million for the three months ended March 31, 2025, respectively, as compared to $27.2 million for the corresponding periods of the prior year. Royalty expense represented 8.3% of net sales for the three months ended March 31, 2025 as compared to 8.4% of net sales for the corresponding periods of the prior year. This slight decrease was primarily driven by favorable 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 22.2% for the three months ended March 31, 2025, respectively, as compared to 21.0% for the corresponding period of the prior year.
Other Income and Expense
Overall, other income and expense for the three months ended March 31, 2025, was a loss of $1.7 million as compared to a gain of $2.1 million in the corresponding prior year period. The main drivers of this change are discussed in more detail below. One of the main drivers is the impact of our gains and losses on foreign currency where we recognized a loss of $0.8 million in the first quarter of 2025, and a gain of $0.9 million in the first quarter of 2024. Another driver of this change is the impact of our unrealized gains and losses on marketable securities where we had recorded an unrealized loss of $0.7 million in the first quarter of 2025 and an unrealized gain of $1.4 million in the first quarter of 2024. Changes in interest expense and interest income were relatively flat year-over-year.
Interest expense is primarily related to the financing of brand and licensing acquisitions as well as our headquarters in Paris. Long-term debt including current maturities aggregated $150.8 million and $157.3 million as of March 31, 2025 and December 31, 2024, respectively. Interest expense was $1.5 million in the three months ended March 31, 2025 compared to $1.8 million in the prior year period.
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. Approximately 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 months ended March 31, 2025 and 2024.
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 $1.3 million in the three months ended March 31, 2025 compared to $1.6 million in the prior year period. As of March 31, 2025, short-term investments also include approximately $7.3 million of marketable equity securities of other companies in the luxury goods sector. In the first quarter of 2025, the Company had unrealized losses on these securities $0.7 million on these securities compared to unrealized gains of $1.4 million for the three months ended March 31, 2024.
Income Taxes
Our consolidated effective tax rate was 24.5% and 23.9% for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for European based operations was 25.5% and 25.0% for the three months ended March 31, 2025 and 2024, respectively, while the effective tax rate for United States based operations was 18.1% for the three months ended March 31, 2025, as compared to 17.7% 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 22 |
INTERPARFUMS, INC. AND SUBSIDIARIES
Net Income
| Three Months Ended |
||||||||
| (In thousands) | March 31, | |||||||
| 2025 | 2024 | |||||||
| Net income attributable to European based operations | $ | 48,119 | $ | 44,940 | ||||
| Net income attributable to United States based operations | 8,668 | 9,527 | ||||||
| Eliminations | (1,384 | ) | (1,164 | ) | ||||
| Net income | 55,403 | 53,303 | ||||||
| Less: Net income attributable to the noncontrolling interest | 12,911 | 12,255 | ||||||
| Net income attributable to Interparfums, Inc. | $ | 42,492 | $ | 41,048 | ||||
Net income attributable to Interparfums, Inc. was $42.5 million for the three months ended March 31, 2025 as compared to $41.0 million for the corresponding period of the prior year.
Net income attributable to European based operations was $48.1 million for the three months ended March 31, 2025, as compared to $44.9 million for the corresponding periods of the prior year, while net income attributable to United States based operations was $8.7 million for the three months ended March 31, 2025, as compared to $9.5 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 three months ended March 31, 2025 and 2024. Net profit margins attributable to Interparfums, Inc. for the three months ended March 31, 2025 and 2024 aggregated 12.5% and 12.7%, respectively.
Liquidity and Capital Resources
Our conservative financial tradition has enabled us to amass significant cash balances. As of March 31, 2025, we had $171.9 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 March 31, 2025, working capital aggregated $604.6 million. Approximately 78% of the Company’s total assets are held by European based operations, and approximately $277.0 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 11 – Commitments in our 2024 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, 2024, without consideration for potential renewal periods and do not reflect the fact that our distributors share our advertising obligations.
| Page 23 |
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. In March 2025, our 72% owned French subsidiary, Interparfums SA, acquired all intellectual property rights relating to Maison Goutal held by Amorepacific Europe. Amorepacific Europe will continue to operate the Goutal Brand under an existing license agreement that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brand. Additionally in March 2025, we renewed the Coach license agreement for an additional five-year term, extending the license through June 30, 2031.
In December 2024, our 72% owned French subsidiary, Interparfums SA, obtained all Off-White brand names and registered trademarks for Class 3 fragrance and cosmetics products, subject to an existing license that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brands. Additionally, in December 2024, we renewed the Van Cleef & Arpels license agreement for an additional nine-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 used in operating activities aggregated $7.4 million for the three months ended March 31, 2025 and compared to $52.0 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, working capital items used $72.5 million in cash from operating activities, as compared to $111.7 million in the 2024 period. Although from a cash flow perspective accounts receivables are up 8% from year end 2024, the balance is reasonable based on first quarter 2025 record sales levels and seasonality of the business. Day’s sales outstanding remained consistent at 74 days, up slightly from 73 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 March 31, 2025 increased 3% from year end 2024 in support of our overall sales growth. 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 March 31, 2025 as compared to 55% at March 31, 2024. 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 2025 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 March 31, 2025, 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.
These proceeds were offset by the payment for capital expenditures during the quarter. In March 2025, the Company paid approximately $19.7 million for the purchase of the Goutal Trademark.
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 2025 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 March 31, 2025, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2025 consist of a $70 million unsecured revolving line of credit provided by a consortium of domestic commercial banks and approximately $8.7 million (€8 million) in credit lines provided by a consortium of international financial institutions. There was $7.6 million of short-term borrowings outstanding pursuant to these facilities as of March 31, 2025 and $8.3 million outstanding as of March 31, 2024.
In February 2024, the Board of Directors authorized an annual dividend of $3.00 per share. In February 2025, the Board of Directors further increased the annual dividend to $3.20 per share. The next quarterly cash dividend of $0.80 per share is payable on June 30, 2025, to shareholders of record on June 13, 2025.
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 three months ended March 31, 2025
| Page 24 |
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 March 31, 2025, we had foreign currency contracts in the form of forward exchange contracts of approximately USD $161 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.
| Item 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Please see Item 9A. Controls and Procedures, “Evaluation of Disclosure Controls and Procedures” and “Remediation Plan,” as contained in our 2024 annual report on Form 10-K as filed with the SEC (“2024 Annual Report”), which are incorporated by reference in this quarterly report. As stated in our 2024 Annual Report, we believe that the actions set forth under “Remediation Plan,” will collectively remediate the material weaknesses identified. However, our material weaknesses will not be considered remediated until the controls operate for a sufficient period of time and management has concluded, through testing, that the related controls are operating effectively. We will continue to monitor the design and effectiveness of these and other processes, procedures, and controls and will make any further changes management deems appropriate. The above disclosure is applicable to the evaluation of our disclosure controls and procedures for this first quarter of 2025.
Changes in Internal Control Over Financial Reporting
Except as described above, 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.
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INTERPARFUMS, INC. AND SUBSIDIARIES
Item (c).
In February 2025, our Board of Directors authorized the Company to continue repurchasing up to 130,000 shares throughout 2025, which was increased to 260,000 shares in April 2025.
| 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 |
| January 1-31 | 0 | n/a | 0 | 130,000 shares |
| February 1-28 | 0 | n/a | 0 | 130,000 shares |
| March 1-31 | 0 | n/a | 0 | 130,000 shares |
| Total | 0 | n/a | 0 | 130,000 shares |
Item (c). During the first quarter of 2025, director or officer has adopted or either any “” or “,” 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.
INTERPARFUMS, INC. AND SUBSIDIARIES
The following documents are filed herewith:
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 5th day of May 2025.
| INTERPARFUMS, INC. | |||
| By: | /s/ Michel Atwood | ||
| Chief Financial Officer | |||
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