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Edited Transcript of IPAR earnings conference call or presentation 4-Mar-19 6:00pm GMT

Q4 2018 Inter Parfums Inc Earnings Call

New York Mar 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Inter Parfums Inc earnings conference call or presentation Monday, March 4, 2019 at 6:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jean Madar

Inter Parfums, Inc. - Chairman, CEO & Co-Founder

* Russell Greenberg

Inter Parfums, Inc. - Executive VP, CFO & Director

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Conference Call Participants

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* Hamed Khorsand

BWS Financial Inc. - Principal & Research Analyst

* Joseph Nicholas Altobello

Raymond James & Associates, Inc., Research Division - MD & Senior Analyst

* Linda Ann Bolton-Weiser

D.A. Davidson & Co., Research Division - Senior Research Analyst

* Stephanie Marie Schiller Wissink

Jefferies LLC, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Greetings, and welcome to Inter Parfums' Fourth Quarter 2018 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Mr. Greenberg, you may begin.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [2]

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Thank you, Dana. Good afternoon, and welcome to our 2018 Fourth Quarter and Full-Year Conference Call. We will follow our regular format today, as I will start the call with a discussion of our financial results and then Jean Madar, our Chairman and CEO, will provide an overview of our business and share some of our plans for the future, and then we will take your questions.

Before proceeding further, I just want to remind listeners that this conference call may contain forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from projected results. These factors include, but are not limited to the risks and uncertainties discussed under the heading Forward-Looking statements and Risk Factors in our Annual Report on Form 10-K and the reports we file from time to time with the Securities and Exchange Commission. We do not intend to and undertake no duty to update the information discussed.

When we refer to our European-based operations, we are primarily talking about sales of Prestige Fragrance products conducted through our 73%-owned French subsidiary, Inter Parfums S.A. When we discuss our United States operations, we are primarily referring to sales of Prestige Fragrance products conducted through our wholly-owned domestic subsidiaries.

Summarizing our better-than-expected fourth quarter performance. Net sales were $177.2 million, up 18.5% from $149.5 million. At comparable foreign currency exchange rates, net sales increased 21.2%.

Net sales by European-based operations rose 16.8% to $134.8 million from $115.4 million. Net sales by U.S.-based operations were $42.4 million, up 24.4% compared to $34.1 million.

Gross margin was 66.1% for both periods. SG&A expenses as a percentage of net sales were 60.1% compared to 61.4%. Operating income was $10.6 million, up 120% as compared to $4.8 million.

Net income attributable to Inter Parfums, Inc. increased 82.9% to $8 million compared to $4.4 million. And finally, net income attributable to Inter Parfums, Inc. per diluted share rose 85.7% to $0.26 from $0.14.

Thus for the year as a whole, net sales increased 14.3% to a record $675.6 million as compared to $591.3 million in 2017.

At comparable foreign currency exchange rates, net sales increased 12.8%. Net income attributable to Inter Parfums, Inc. increased 29.3% to $53.8 million from 2017's $41.6 million, and net income per attributable -- net income attributable to Inter Parfums, Inc. per diluted share rose 28.6% from -- to $1.71 from $1.33 per diluted share in 2017.

Most of my financial discussion will be focused on the year as a whole, but a few fourth quarter items are worth noting. It helps to know that in the final quarter of 2018, the average dollar/euro exchange rate was 1.14 versus 1.17, resulting in a slight benefit to gross margin for our European operations. In addition, income from operations in the fourth quarter of 2017 included a $2.1 million impairment charge relating to our legacy mass market business.

Since I'm sure you've all spent the weekend reviewing over 2018 Annual Report on Form 10-K, you know that there is more to be gained by looking at our business on an annual basis rather than by an isolated quarter.

We've already discussed the contributions to our gross sales in our press release, but I do want to highlight two 2018 game changer brands for us. The first, which is part of our European-based operations, is Coach. A brand which has gone from 0 to close to $100 million since 2016 when our first Coach scent was launched.

The second brand is GUESS. The addition of GUESS legacy scents beginning in April of 2018 has been a major contributor to the increase in 2018 sales. Another point worth emphasizing is our European-based product sales were meaningfully ahead of last year, not because of a major blockbuster launch, but rather on the basis of continued sales of established scents, along with the introduction of several flankers and brand extensions.

Moving on to profitability inputs. Gross margin for our European operations was 66.3% in 2018 and 67.1% in 2017. The average dollar/euro exchange rates was 1.18 for the full year in 2018 as compared to 1.13 for the full year in 2017, with that weaker dollar accounting for the small fluctuation in gross margin.

For U.S. operations, gross margin was 51.4% in 2018, up more than 200 basis points from 49.3% in 2017, with the improvement primarily resulting from increased sales of higher margin Prestige products under license.

There isn't much to talk about in the SG&A arena, except to say that these expenses accounted for 49.3% of net sales in 2018 and 50% in 2017. Since 2017, we have earmarked 21% of net sales as our aggregate annual promotion and advertising expenditure target. Such expenses aggregated 20.7% in 2018 as compared to 20.9% in 2017.

With regard to nonoperating items that influenced the bottom line, we benefited from the reduction in the corporate tax rate in the United States and to a lesser extent in France.

In 2018, our effective tax rate was 27.3% as compared to 29.2% in 2017. Our financial position remains extremely strong. At year-end, working capital aggregated $382 million, and we had a working capital ratio of over 3:1.

Cash and cash equivalents and short-term investments aggregated $261 million. Long-term debt including the current portion aggregated $46.1 million.

With the benefit of greater visibility since we issued of our initial expectations for 2019, we have raised our guidance and now look for, [net sales of] $112 million, resulting in net income attributable to Inter Parfums, Inc. per diluted share of $1.85. As always, guidance for 2019 assumes that the dollar will remain at current levels.

Jean, please continue.

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [3]

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Thank you, Russ, and good afternoon to all of you. Before moving on to business, I want to acknowledge with sadness the recent passing of Karl Lagerfeld, a giant in the fashion industry whose name we have licensed since October 2012. We will continue to honor his memory with fragrance that evoke his unique stature and elegance among the world's leading designers.

And now on to business. 2018 was a great year for our company by continuing to support our portfolio of brands with product and promotion, adding new brands to our roster and expanding our distribution geographically, both in brick-and-mortar stores as well as a through e-commerce.

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

As we reported, we achieved sales growth in all the regions in which we operate. The fourth quarter was especially strong in our 3 largest markets, culminating in year-over-year sales growth in North America, Western Europe and Asia.

For North America, it was up 19%; Western Europe, 9%; and Asia, 24%. We also made gains in the Middle East and Eastern Europe, with sales up 17% for Middle East and 7% for Eastern Europe.

In addition to growth, we continue to achieve exceptional productivity. With only 300 employees, we attained $675 million in sales, which equates to $2,250,000 per -- I mean, $2.2 million per employee

As we prepare for our approach to the $1 billion sales mark, we have established several new posts, made some critical new hires and elevated several exceptional individuals to positions of greater responsibility. We are now in a far better position to support the growth we anticipate in the coming years.

Before I proceed with the highlights of our new products launch schedule, I want to share some thoughts on the importance of brand extensions. In our business, we call it flankers since they play a critical role in our business. No doubt blockbuster, megabrand global launches our huge sales catalysts, but flankers and brand extensions generally keep those fragrance relevant and trendy over time.

It is also less expensive and easier to launch the flanker in the world where perfume bottle can take up to 2 years and many hundreds of thousands of dollars to design and produce. Flankers have similar bottles and caps as the original, different fragrance, of course, and it goes for the packaging and advertising graphics as well. As a rule, there is less risk associated with doubling down on a successful fragrance rather than starting from scratch on the new formula, which may or may not be successful. Flankers also give us the opportunity to revive a once-popular brand.

So now we will move on to the new product launches in the pipeline and we have many. We will focus on our largest brands. Mont Blanc in January initiated the global rollout of Explorer, our new fragrance, which would energize brand sales in 2019. The first results are way above our expectations.

Later in the year, we have a new men's line, debuting for the Jimmy Choo brand, along with new interpretations of Jimmy Choo Blossom Illicit and L'Eau. In 2020, we'll be looking to expand the brand into beauty with lipsticks and nail polish at a high-retail price, plus an entirely new women's fragrance franchise.

So for Coach, we are relying on established scents and a second floral flanker to sustain brand sales in 2019, as we prepare for a major women's fragrance launch in 2020.

For Lanvin, we will launch a new fragrance for women called a Girl in Capri, and this will debut in the summer.

For Rochas, we've got the Moustache line rolling out, the first men's scent developed by us since we acquired the brand. We will also have our third interpretation of the Rochas Mademoiselle line. We may also unveil an entirely new Rochas women's scent late in the year, but it could fall into early 2020, which is when we plan to introduce our second new men's fragrance for the brand. I'm also pleased to report that Rocha's fragrance are being sold in about 20 countries today. Historically, distribution was for the most part limited to France and Spain.

With regard to the U.S., for GUESS, we will further expand existing pillars, starting with 1981 Los Angeles where domestic distribution will begin in the spring, followed by international rollout in the fall. Then, later in the year, September/October, we will introduce a new product called Seductive Noir, a brand extension. The domestic rollout will start in September and international distribution coming the year after. But for 2020, we will -- we are developing a new blockbuster women's scent for the GUESS brand with a very upscale designer cache.

For Anna Sui, we have launched -- we have a new addition in 2019, following the great success of Fantasia that we launched in 2018 and next month a flanker called Fantasia Mermaid will debut, and as the fragrance sales are concentrated throughout Asia, but she also has a strong following in the U.K. as do our fragrance. In 2020, the Anna Sui brand has major launch planned for the new fragrance family called [Sky].

For Dunhill, we have an exclusive with Harrods in London for the new signature collection starting in April and running through year-end. This will be followed by a global rollout next year.

And for Abercrombie & Fitch, we are launching, as we speak, a new duo called Authentic. We're launching in the U.K. first and global distribution will follow a month after.

Let me bring you up-to-date on our newest brand, Graff and Lily Aldridge. With regards to Graff, we're going to create 6 scents for our debut collection. It now looks like early 2020 or very late 2019. This is our revised timetable for launch. We are also in discussions with premier hotel about supplying exquisite Graff travel amenities and with airlines for their first-class customers' gift bags.

And finally, the Lily Aldridge program is moving forward with 4 scents, each associated with important geographic markets in the supermodel's life. Our time table anticipate the first Lily scent to debut in September, the second in November of this year, and then the remaining 2 in early 2020.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Linda Bolton-Weiser with D.A. Davidson.

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Linda Ann Bolton-Weiser, D.A. Davidson & Co., Research Division - Senior Research Analyst [2]

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So can I just ask you a little bit about the gross margin, let's say, I guess, it was a little less than we had thought. And I guess, it was sort of flat year-over-year. And yet, the currency was -- the comparison was even more negative, i.e. weak euro. So wouldn't that have helped your gross margin? I think you said it did in the European segment, but I'm just wondering why it didn't affect the whole gross margin more? So maybe you could touch on the U.S. gross margin. I'm just trying to figure out why the gross margin wasn't sort of up more year-over-year?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [3]

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This is a question for Russ.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [4]

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As I indicated, the exchange rate for the full year was 1.18 as compared to -- in 2018 as compared to 1.13, right, reflecting a slightly weaker dollar and that normally would have a negative effect on gross margin. However, also for the quarter, it actually flipped the other direction where the exchange rate was actually a little bit positive. The real key though overall is that the negative effect from the currency exchange rate was mitigated due to the significant increase on the U.S. side of our business. The U.S. side saw a gross margin come in at 51.4% in 2018 and that's up from 49.3% in 2017. And that increase in margin was primarily related to more products that are sold under -- Prestige-type products sold under license, which is the direction that our European -- that our U.S. business is moving. So the counter effects of each of those is really where we ended up. Overall, on a company-wide basis, you have a very small decline in gross margin from 63.6% down to 63.3%.

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [5]

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And I would like to add that in the U.S., we'll continue to improve our gross margin for 2019 by at least 100, maybe 200 basis points. You agree, Russ?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [6]

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Yes. That's -- it grew exactly by almost 200 basis points this year. And I think that, that will continue again, as we move towards more sales of the higher-margin Prestige products.

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Linda Ann Bolton-Weiser, D.A. Davidson & Co., Research Division - Senior Research Analyst [7]

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Okay. That's helpful. Can I also ask you -- can I ask you mentioned $1 billion in sales as, I guess, a goal. I guess it's the first time I've heard you say that. What kind of time frame are you thinking you can get to $1 billion?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [8]

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I knew you were going to ask that. Look, we have today with -- when you look at the portfolio, we have now 3 brands that are close to 100 -- that are $100 million brand. We think that GUESS has the potential in the 2 to 3 years from now to be $100 million brand. So yes, it's a goal. I don't know if it's going to be 3 years from now or 4 years from now, but this is time frame that I will put.

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Linda Ann Bolton-Weiser, D.A. Davidson & Co., Research Division - Senior Research Analyst [9]

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And can I also ask your comments about Mont Blanc Explorer. I think you said already doing better than expected. So is it possible the first quarter revenue could be up double-digit year-over-year? Is that possible?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [10]

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I don't know if we can comment, but what we can say, we're already 2 months into the first quarter. And with that, we could look at a very, very strong first quarter in 2019.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [11]

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Yes. The only thing I would add to that, last year's first quarter was up about 20%, all right. Let's keep in mind that the guidance implies an increase of between 5% and 6%. Could Q1 be a little bit better? Q1 was one of the highest-growing quarters we had in 2018. So yes, I think it's going to get pretty close to that double-digit, whether or not we'll exceed it, that we don't know yet.

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [12]

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But with the launch of Explorer and with the fact that in the first quarter last year, we didn't have any sales for GUESS, we think we could have -- we could look at a very strong first and second quarter.

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Operator [13]

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

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Joseph Nicholas Altobello, Raymond James & Associates, Inc., Research Division - MD & Senior Analyst [14]

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Just want to go back to the guidance -- in the guidance revision this early in the year. It sounds like January, February were pretty strong. So just curious, did you see broad-based strength? Was it based on new launches like the Mont Blanc [Explorer] brand? Was it particular geographies that we are strong? So just trying to get a little more insight into what you saw in the first 2 months of the year that gave you a more confidence for the full year outlook.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [15]

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I'll start, John. I think it's a combination of a few different things. First of all, we also ended the year 2018 on a very, very strong note. The market for our products has been and continues to be very strong. So that also played a little bit into our decision to raise the guidance. But clearly, the results that we are seeing and the initial results that we are seeing on what will be probably one of the year's biggest launches, which is the Mont Blanc launch, that is also playing a significant role as far as why we decided to increase the guidance so early on in the year.

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Joseph Nicholas Altobello, Raymond James & Associates, Inc., Research Division - MD & Senior Analyst [16]

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Okay. That's helpful. And then maybe secondly...

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [17]

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If I may, I would add that we gave this guidance what in November, I guess, the first guidance. But then we see the sales grew in stores. And we traveled -- the whole company traveled a lot December and January. And what we see that the inventory at distributor level and at store level is quite low. We have large request of -- we have large purchasing from our distributors in January and February. So we are much more confident. And that's why we are increasing slowly because we have to stay conservative, we have to -- that's why we increased the guidance. But in general, Asia is in very good shape. I know that a lot of analysts are looking at Asia. We were little nervous, but we are not nervous at all. We checked our sales by stores, and we are in a very good position. We'll continue to grow double-digit in Asia. Our sales in Europe also are looking great because of the launch of Mont Blanc Explorer, which will be the third franchise of Mont Blanc. So honestly, it was completely normal to raise guidance.

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Joseph Nicholas Altobello, Raymond James & Associates, Inc., Research Division - MD & Senior Analyst [18]

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Okay. Understood. And then maybe 2 quick follow-ups for Russ. One, what's the tax rate you guys are assuming for '19? And I see it bounced around a lot in '18. And then secondly, it looks like U.S. expense jumped up from 3Q to 4Q. What caused that? And what should we expect for '19?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [19]

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With respect to the tax rate, there really wasn't too much that was unusual as far as the tax rate going into 2018. So I think that the number that we have in 2018 should probably be fairly consistent with what we would expect in the future. And once again, in case you missed it, the effective exchange rate came in at around 27.3%. From an interest standpoint, interest rates have been rising little by little throughout the year. We do have a significant amount of cash and cash equivalents and short-term investments on our balance sheet. We have been able to see a greater return on some of that cash and it's really -- I don't think it's anything that's all that significant. But for the full year, the interest line was up overall about $1 million.

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Operator [20]

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

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Stephanie Marie Schiller Wissink, Jefferies LLC, Research Division - Equity Analyst [21]

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Follow-up question just on the life cycle of your core lunches. You saw Mont Blanc continue to grow without any major launches in 2018 -- excuse me, 2018. I'm curious if you can just talk a little bit about the life cycle of those core brands? And if you are continuing to see strength in some of the underlying product launches from prior years?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [22]

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The good -- very good news is that we do not see any cannibalization in the launches of the new lines. It means that we're able to grow. We had a great year of -- in 2018 without any major blockbuster launch. It means that our products are -- existing lines are taking market share. And the new lines, specifically, the new Mont Blanc, we do not think that the positioning of the new Mont Blanc will have an impact -- negative impact on the existing business of Mont Blanc. So as I said many times, we are very careful in our products -- when we launch products in our portfolio to make sure that we do not replace sales but we continue to build on. And it's the case on Mont Blanc. It's the case on Rochas. It's the case on the Coach. We just launched Coach Floral, which is an extension of what we call a flanker and it's adding to the total business. It's not replacing. So these are very, very positive sign for us.

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Stephanie Marie Schiller Wissink, Jefferies LLC, Research Division - Equity Analyst [23]

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That's great. And Russ, if I could, one for you, just on the SG&A. You had some nice leverage within the quarter and the year. I'm wondering if you can talk a little bit about what you're seeing with selling expense in particular. Is there an element of marketing efficiency that you're starting to find with some of -- either your core launches or some of your flankers?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [24]

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Overall, again, I think we've been pretty open and transparent and also very consistent with respect to the A&P spend, which is probably the single biggest line within that SG&A. As mentioned in the opening remarks, we targeted 21% as an A&P target for both 2017 and '18. We came in almost exactly where we expected. Even though sales were a little bit greater than expected towards the end of 2018, all that really means is that we're going to continue to add dollars to that ad spend to keep that momentum going. That's been a game plan that Inter Parfums has followed for many, many, many years. Other items within the SG&A, we've gotten to the point that we finally reached the operating margins that we were really targeting for. This year, we ended up at around 14%. Our next goal, of course, is to see if we can expand it to perhaps 15%. I can't pin a target date on it, but that is going to be a goal of ours as we continue to grow our top line.

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Operator [25]

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(Operator Instructions) Our next question comes from the line of Hamed Khorsand with BWS Financial.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [26]

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

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [27]

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As I said before there's no cannibalization at all. We're reaching, I will say, a different consumer. We're -- this is a major launch for us. Mont Blanc did not have a new fragrance for 2 years now. So it has been expected in the market. The good news is that the distribution is giving us -- the trade is giving us lot of space and either in Europe or in the U.S. or in the Middle East, which I'm traveling right now, we're seeing some great numbers. We just got some reports from duty-free, which are much higher than expected. So we think that the product is at the right price point. It's an elevated product and it has all the cache of Mont Blanc. So we waited. We could have launched this product in the very end of 2019, but we thought it was better to wait -- 2018, I'm sorry. We felt it was better to wait for first quarter. And we'll have -- so like this, we'll have a full year this year [of issue]. Russ, you want to add something?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [28]

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No. I think you've hit it. One of the main things that Inter Parfums tries to do when we create new product for each of the brands that we have and that is to try to attract new consumers to the brand. We study the brand, we look to see what the brand is doing from the standpoint of their other key products that they sell and try to capture the potential new customers through that brand. And I think that's really what bodes well for the success and the minimal cannibalization that we're expecting.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [29]

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

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [30]

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I don't think there is anything in particular that's driving it. Inter Parfums is always and has always been and will always continue to be relatively conservative with respect to our guidance. There are a lot of variables in connection with this. The exchange rates being one. We're coming off a year that was a very, very successful year, with new license activity adding to the top line growth that we had in 2018. So looking at the business as a whole, we felt very comfortable with the initial guidance that we've given. And today we think the business is stronger and therefore, we've raised our guidance to the extent that we deem necessary and we will continue to monitor those variables. And if need be, we'll continue to raise our guidance in the future. But I don't think there's any individual input that is making the decision for us. It's really a combination of looking at the environment, looking at the business and looking at the facts.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [31]

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Okay. And then finally, just given that the scope of all these new product releases and your revenue increasing, are you guys going to stay on target of 21% as far as the advertising spend or could it decline even though the dollar amount is increasing?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [32]

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I think it's very important to spend this kind of dollars. This is insurance for the future. We need to spend money to keep ourselves growing to try to get new customers, to improve our market share. So this 21% is definitely the right number. We do not want to decrease it in order to show more profit. We'll show more profit if we sell more, not if we decrease our advertising budget.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [33]

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Yes. I will also just add that the -- that number is up from what was 17%, 18% just a few years ago. So we have increased it. And I tend to agree with Jean that it's now at a level where it needs to be. And I don't see us decreasing it at all. Increasing it, we'll have to reevaluate that as we continue to evaluate the market. But at this time, I think the 21% is pretty solid moving into 2019.

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Operator [34]

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

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [35]

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Thank you, again, Dana. Before signing off, I would just like you to know that on May 14, I'll be presenting at the Citi Consumer Staples Access Day in New York and on May 30, I will be at the D.A. Davidson, Consumer Conference in Chicago. And then on June 18, I will be at the Jefferies Consumer Conference in Nantucket. Thank you all for tuning into our conference call. And as always, if you have further questions, please contact my office. Have a great day. Thank you very much.

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Operator [36]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.