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Edited Transcript of IPAR earnings conference call or presentation 12-May-20 3:00pm GMT

Q1 2020 Inter Parfums Inc Earnings Call

New York May 15, 2020 (Thomson StreetEvents) -- Edited Transcript of Inter Parfums Inc earnings conference call or presentation Tuesday, May 12, 2020 at 3:00:00pm 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 and MD

* Wendy Caroline Nicholson

Citigroup Inc, Research Division - MD & Head of Global Consumer Staples Research

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Presentation

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Operator [1]

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Greetings, and welcome to the Inter Parfums First Quarter 2020 Conference Call. (Operator Instructions) Please note that this conference is being recorded. I will now turn the conference call over to Russell Greenberg, Executive Vice President and Chief Financial Officer of Inter Parfums. Thank you, 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, operator. Good morning, and welcome to our 2020 first quarter conference call. It is obviously not business as usual. What has happened since our last conference call on March 3, has been unlike anything any of us have ever experienced or even imagined. We see no need for me to read out the first quarter comparisons that were in the release we issued yesterday afternoon. I will devote my discussion to explanations of those results and to the balance sheet and cash flow items. Jean will then bring you up-to-date on how our business is faring through the COVID-19 pandemic, where we see bright spots and opportunities, where we see weaknesses and key aspects of our plan of action.

As usual, however, I must read the following. 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 headings, Forward-looking Statements and Risk Factors, in our annual report on Form 10-K for the year ended December 31, 2019, the quarterly report on Form 10-Q for the first quarter ended March 31, 2020, and other 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.

One more recurring message 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 SA. When we discuss U.S.-based operations, we are primarily referring to sales of Prestige Fragrance products conducted through our wholly owned domestic subsidiaries.

Our consolidated first quarter gross margin of 61.5% of net sales was just 10 basis points off of last year's first quarter. Once again, the strong U.S. dollar had a positive effect on our gross profit in for European operations, which rose 70 basis points to 63.9% as compared to 63.2% from last year's first quarter. For U.S. operations, gross profit margin was 52.6%, compared to 55.1% with the decline related to product mix. In particular, Anna Sui product sales declined sharply in January and February as China closed down. This brand is a best seller in Asia, overall, and in China, in particular. And the gross margins on Anna Sui product sales are among the highest in our portfolio of brands.

As I turn the discussion to expenses, please keep in mind that our entire operational budget for the first quarter was based on our originally projected annual sales of $742 million. And as we discussed on our last conference call, our sales in January and February, with the exception of China, were pretty good. But when sales practically ground to a halt in March, our advertising and promotion campaigns were underway, and there was nothing we could do to recover those expenses.

So for the first quarter, promotion and advertising included in SG&A expenses approximated 19.7% of net sales compared to 15.4% in last year's first quarter. In a typical year, we budget around 21% of net sales for advertising and promotion, with the fourth quarter accounting for the largest percentage. This is not a typical year and with new product launches postponed, you can expect a decline for advertising and promotion in dollars as well as a percentage of net sales in future quarters this year.

For European operations, SG&A expenses declined 6.4% and represented 50.1% and 42.5% of 2020 and 2019 1st quarter sales, respectively. For U.S. operations, where sales dropped 10.9%, comparable quarter SG&A expenses decreased 8.8% and represented 45.8% and 44.7% of net sales in 2020 and 2019.

The first quarter story is one of significant erosion from the positive leverage that we've seen over the last couple of years as the loss of fixed cost absorption produced a steep decline in our operating income and margin. We are looking for an even greater decline in the second quarter sales as compared to last year's second quarter.

We have been able to rein in some advertising and promotion expenses. And of course, travel and nonessential expenses have been severely cut, but loss of fixed cost absorption is expected to continue. We are looking for some improvement as the year unfolds, but until we see firm product orders, it is impossible to quantify.

You probably saw that below the operating income line was a $954,000 gain on foreign currency as compared to a $151,000 loss in last year's first quarter. Also, our effective tax rate was 29% and 27.4% for the current and prior year's first quarter. With the European rate dropping 1 percentage point and the U.S. rate increasing -- I'm sorry, decrease -- I'm sorry, increasing from 12.1 to 20.9.

In last year's first quarter, tax benefits from the exercise of stock options significantly lowered our U.S. tax rate. One of the points Jean made on our last conference call bears repeating. When the coronavirus was first identified, we were worried about the supply of certain components coming from China. But because of tariffs imposed last year, we had already identified alternative sourcing. At this point, we not only have alternative sources, but Chinese factories we buy from are pretty much operational.

On a related subject, you will see that our inventories at March 31 are relatively unchanged from year-end, where there was little, if anything, being reported about COVID-19. At year-end, our inventory levels were built to support 2020 new product launches. Well, with the exception of Coach Dreams, which debuted in January, most of our major launches have been pushed into 2021. As a result, even though we have worked closely with our vendors to push out inventory purchases where possible, we anticipate that inventory levels will increase in the coming quarters.

If there ever was a time for a strong balance sheet, it is now. We closed the first quarter with working capital of $386 million, including approximately $204 million in cash, cash equivalents and short-term investments. We had a working capital ratio of over 3.7:1 and only $9.8 million of long-term debt. We also have $47 million in untapped credit facilities.

Finally, as previously reported, we temporarily suspended our quarterly cash dividend, saving us approximately $10.4 million per quarter. Now I will turn the call over to Jean for a closer look at how we are doing, what we are doing and our expectations. Jean?

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

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Yes. Thank you, Russ, and good morning, everyone. While I won't repeat most of the points we raised in our release and Form 10-Q filed yesterday, I do think that the exceptional performance of Coach Dreams and GUESS legacy products are worthy of special mention. I also think that there is value in pointing out certain fundamentals of our business model, which distinguished Inter Parfums from some of its peers and immunized us against some of the harshest effects of this pandemic.

Let's look at them. Firstly, we are not capital intensive. We don't own factories. We don't operate stores. Our 2020 CapEx budget is only $4 million. We have 400 full-time employees worldwide, not thousands, and approximately 2/3 of our expenses are variable and our near-term fixed expense should come in at under $25 million per quarter. So we have always maintained an exceptionally strong balance sheet, so we don't need to raise money, nor hire more people at present, not in the future to grow our business.

While we have instituted a hiring freeze, we have not furloughed, nor discharge our employees. And although we have not cut any salaries, we have notified our staff that we will eliminate 2020 bonuses.

Moving on to our markets. As noted in the first quarter, the impact of COVID-19 was most severe in the Middle East and Asia where net sales declined for us 44% in the Middle East and 37% in Asia, respectively, for the first quarter.

In North America and Western Europe, where shelter-in-place and store closing were implemented later in the period. First quarter net sales declined only 1% in North America and 11% in Western Europe.

Towards the end of March and into April 2020, northern part of Asia have reopened with China taking the lead and South Korea and Taiwan following. We've seen that business -- some business bounce back. As noted, one of our best-selling brands in Asia is Anna Sui and although brand sales at retail were poor in January and February, come March, brand sales at retail were revived due in great part to e-commerce sales, and these trends appear to be continuing. However, to date, Japan, Australia and markets in Southeast Asia are still in the containment phase, and most retail outlets remain closed.

Our consolidated sales for the month of April were down significantly. Yes, there has been an improvement in China, but sales in Western Europe and North America, our 2 largest markets, continue to feel the effects of the pandemic. Much of Western Europe has recently reopened, like Germany, very recently, Austria and now Italy, with others planned for later this month. France opened some stores yesterday.

Several U.S. states have also begun to restart with more coming on board in the weeks and months ahead. So things are moving in the right direction also in the Middle East with shopping malls beginning to reopen. However, business in the U.K., a very important market for us, Russia and travel retail are at a standstill. So as Russ noted earlier, second quarter sales will be down significantly.

With regard to retail, the reopening of brick-and-mortar stores has been gradual. The process is complex and the regulations differ by country and locality. In general, stores must effectively deal with a number of issues, including signage, sanitation, staff training, monitoring, masks for staff and for consumers and limiting also the concentration of customers. Some have imposed curbside pickup, which is not conductive (sic) [conducive] to fragrance purchases.

Even with economies opening, our expectations are restrained. And quite frankly, we expect near-term demand for fragrance to be considerably less than last year. Moreover, while online sales have increased since stores closing, our online sales primarily rely on third parties like department store, specialty store, Amazon or Alibaba, rather than our own e-commerce site. Nonetheless, we are looking beyond 2020. Our business development team has able to devote more time to exploring brand acquisition, but so far, nothing firm to report.

So before taking your questions, one thing is, Russ and I want to extend our appreciation to all of our employees as well as our suppliers, our distributors around the globe for their effort during this unprecedented period.

So now operator, you can open the floor for questions. Russ and I will be glad to answer.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Joe Altobello with Raymond James.

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Joseph Nicholas Altobello, Raymond James & Associates, Inc., Research Division - MD & Senior Analyst [2]

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Just wanted to start in terms of Asia, in particular in Northern Asia, where you're starting to see markets open up, you mentioned Korea, China, for example. Curious what trends you're seeing in April in brick-and-mortar retail in these 2 markets. Is traffic starting to come back? Is it starting to get -- is it up year-over-year? Or is it just up sequentially from where it was in February, let's call it?

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

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Okay. This is something that I follow carefully. The traffic in brick-and-mortar stores are down this year comparing to last year. Even in the month of April, the traffic is down. I expect something like 50%. But our business was up because of e-com. And the fragrance -- the part of e-com in China, for instance, for fragrance, is today much bigger than the brick-and-mortar stores. So we will see, I think we'll continue to see sales up in e-commerce, which will balance the fact that the traffic and the sales at brick-and-mortar stores are down.

If you want, I can add, because I'm following this on a weekly basis, I get reports. What -- China is the big, big animal that everybody is looking at. But as you know, for us, Korea is a very important market. And because there is no travel, all the very strong duty-free business that we had in Korea, especially serving Chinese customers who are traveling is absolutely down to 0. When is it going to reopen? This is a big question mark.

But in -- what else can I tell you, Japan stores are closed, so that's all I can tell you for now for Asia. But I can -- if you want -- I mean, if you have other questions, I can give you a more precise indication by countries in Europe, et cetera. But if you need I'm available.

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Joseph Nicholas Altobello, Raymond James & Associates, Inc., Research Division - MD & Senior Analyst [4]

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No, absolutely. That's helpful. I just wanted to follow-up with that. You mentioned travel retail, obviously, significantly impacted for the foreseeable future and seeing a little bit of an uptick or significant uptick in e-commerce. If you could size for us, last year, how big travel retail was from a sales and earnings perspective and how big e-commerce was for you guys.

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

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Let's talk about the duty-free business. I have to tell you that we have reduced drastically our projections for travel retail. At the end of the year, I expect this business to present maybe 5% to 7% of our business, where, last year, it was, I will say, almost 20% for us last year, travel retail.

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

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Between 15% and 20%, absolutely.

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [7]

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So this is really where we're going to feel the most painful effect because all airports are -- I mean, all airport operators of duty-frees are closed. We think the traffic is going to be way down. We think -- and there is also a problem of exposure, receivables with operators that have not paid bills yet, so you don't want to give them more credit.

So really, the travel retail for Inter Parfums is maybe the most affected -- will be the most affected part of the business. The other territories, Europe, U.S. will start recouping, we think, in our projections, we have starting the month of June, July and August. We have, as Russ said, we have maintained a good amount of inventory, a higher amount of inventory that we need for the sales that we'll have this year. But in case the market rebounded faster than we expect, we will have the immediate inventory to respond.

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Joseph Nicholas Altobello, Raymond James & Associates, Inc., Research Division - MD & Senior Analyst [8]

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And e-comm as a percentage of revenue?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [9]

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Russ, you want to answer on e-comm?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [10]

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Okay. E-comm, Joe, as I usually say, is a little more difficult to quantify because of the fact that many of our brick-and-mortar customers also have an e-comm section and we're -- we get some indications, but we don't know precisely how much of their business is actually done through e-comm.

In China and in Asia, it's a little bit different because Jean, I think, what is it, close to 70% of the sales in China are through e-comm?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [11]

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Yes, yes. Where if you put together the macys.com, the sephora.com, ulta.com, so all these third parties e-comm. For us, it's less than 5% of our business today.

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Operator [12]

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Our next question comes from Linda Bolton-Weiser with D.A. Davidson.

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Linda Ann Bolton-Weiser, D.A. Davidson & Co., Research Division - Senior Research Analyst [13]

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So in terms of your comment about fixed cost being less than $25 million per quarter, is that on the SG&A line alone? Or is that including some costs that are in COGS as well? And can you comment on how permanent those reductions would be? I mean, obviously, the bonus reduction would come back later. But can you just comment on sort of if any of this would be more permanent?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [14]

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Well, the -- first of all, there is a little bit in COGS, but it's almost inconsequential. The only thing that's in COGS that is a fixed expense is your amortization or depreciation on tooling for the -- for molds that we create for bottles, caps and collars and things of that sort. So most of what we're talking about with respect to this $25 million is in the SG&A. And where we came up with the number is really we're looking at it as to what we expect in the near term.

What we've done with respect to the fixed costs, as Jean mentioned, we did not furlough any employees. We only have 400 people. We do -- it took us a long time to build the team that we have. The last thing we really want to do is to lose some of the great talent that we have.

Once this pandemic is over, we really do expect things to get somewhat back to normal, and we would want to have this great team that we have. So it's a -- the less than $25 million is a short-term number of what we're expecting over at least the next 2, 3 quarters as we move through this pandemic.

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Linda Ann Bolton-Weiser, D.A. Davidson & Co., Research Division - Senior Research Analyst [15]

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And then you commented on like a down 50% number for retail store traffic. So would it be safe to say that the second quarter revenue is going to be down at least 50%? I mean, when you take into account all the travel retail decline and everything, is that kind of the magnitude that you're looking at maybe for the second quarter?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [16]

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Jean mentioned the 50%. And Jean, correct me if I'm wrong, because I don't want to put words in your mouth, I think you were talking about the brick-and-mortar retail in China.

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

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Absolutely. Brick and retail mortar in China were, when the stores are open, it was down 50%. But let's not forget that in the month of April, all the stores, besides China, all the stores worldwide were closed. So we're not talking about 50%. We're talking about 100%. And we did not -- we are not going to give -- we decided not to give guidance, but let's realize that in the U.S., for instance, there was -- we didn't sell any products in the month of April. And this is because all the stores, all our customers were closed.

Again, this was in our projections. When we redid our projections in March for the rest of the year. We didn't expect sales in April. It's going to be a little bit better in May. Already, we think that June will be, of course, better. So it's going to be a quarter of -- a very unusual quarter.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [18]

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And we can't make any projections because the visibility really isn't there. Not only do we not know when different states within the United States might open, but certain countries around -- or other countries around the world. And then you also don't know what the acceptance rate of the stores opening is going to be. And that's the reason we don't have the ability -- we don't have the visibility to actually put out any projections.

But honestly, in the second quarter, we expect that to be the worst quarter, clearly, without a doubt.

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Linda Ann Bolton-Weiser, D.A. Davidson & Co., Research Division - Senior Research Analyst [19]

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That's helpful. And then can I just ask you in terms of the cutting of the dividend, what KPIs or metrics or financial numbers or what would trigger your thoughts to bring back the dividend? Like what kind of condition would you want to see the business in to bring back the dividend?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [20]

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Honestly, it's a very good question because I ask myself this question because, as you know, me and Philippe, my partner, we receive 45% to 50% of this dividend. So when do we think that it will be time to go back to dividends? It's important to have better visibility to -- for 2021. So when I think the company will be -- will have a better feeling of how 2021 is going to be, when we're going to be back to normal comparison of sales, normal type of profits, we'll definitely go back to the dividend. Again, dividend was not too much a cash flow thing because we have, I think, $200 million. And again -- but we think that it was not right to -- it was better to hold it.

Again, if we are too conservative, if we -- if the business come back faster than what we think, it's very easy to reactivate the dividend. Russ, you want to comment on that?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [21]

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Yes. I mean the only thing I would add is that when the Board met to discuss a lot of it really went around the cash flow issue, right? And as soon as we have things get back somewhat, where we can -- where we have the visibility we need and our projections show that we have a positive cash flow, I think the company will revisit the dividend.

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Operator [22]

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Our next question comes from Wendy Nicholson with Citigroup.

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Wendy Caroline Nicholson, Citigroup Inc, Research Division - MD & Head of Global Consumer Staples Research [23]

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A couple of questions. First, just following up the online business, because it's all going through third parties, and you don't have to manage any of the fulfillment yourself. Is it fair to say that the margin of online sales is neutral to traditional brick-and-mortar sales? No advantage or disadvantage for you, is that right?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [24]

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Absolutely. Absolutely. Totally neutral.

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Wendy Caroline Nicholson, Citigroup Inc, Research Division - MD & Head of Global Consumer Staples Research [25]

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Okay. Second thing. Totally neutral. Okay. On their call yesterday, Coty talked about some customers, and I -- they didn't call out which customers, which class of trade, but some customers in the beauty space were having trouble paying their bills. And so receivables have gone up for the quarter. And I'm wondering if you have any issues. I know you said you don't have any liquidity issues. But Russ, are you having any challenges on the receivable side?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [26]

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We are working very closely with pretty much all of our customers because everybody is trying to push things out as much as they can due to their own cash flow issues. The only area, though, where we have seen a little bit of a collection issue, as Jean mentioned, is in the travel retail. Some of these -- some of the duty-free operators and the airlines are suffering significantly. Their doors are completely closed, and we're getting some pushback on some collection efforts.

But honestly, for the most part, we are working very closely with all of our customers. Some of them are on payment plans. There are a couple of retailers that, of course, are sketchy with respect to the possibility of bankruptcy. But none of the major customers that we deal with have filed bankruptcy at this time.

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

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And I would like to add, if I may, I would like to add that either from our operations in Paris or in New York, most of -- 99% of our receivables are covered by insurance. So we have -- like Russ has said, we see maybe some weakness with one or 2 travel retail operator, but the risk is in hundreds of thousands maximum. Yes. So we have absolutely not increased our reserves for bad debt or things like that.

But that's true that all our teams in Europe, in the U.S., in Asia are helping finance department to collect. And I think it's -- we are doing quite well because the collection rate is actually better than -- a little bit better than expected, let's put it this way.

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Wendy Caroline Nicholson, Citigroup Inc, Research Division - MD & Head of Global Consumer Staples Research [28]

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Got it. That's great. My last question, is on the pushout of your new product, which makes total sense, the new launches. I guess the question is, is there inventory sitting there? Do you have bottle of perfume that you thought you'd be shipping that now you're not? Is there any risk sort of inventory obsolescence or any consideration there in terms of impact of those delayed launches?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [29]

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Yes. Thank you. It's a very good question because this is also something where the whole company spends a tremendous amount of time. So number one, the good news is that with fragrance, with perfume, we don't have issues with seasons, with size, with colors as opposed to garments, for instance. So the product that I'm producing today, it will be the same in 6 months, in 1 year, and it is the same than the one I produced 3 years ago.

So yes, we have definitely a little bit more inventory than we would like. But again, as we review on a monthly or quarterly, our inventory, we have not increased at all the reserve for obsolescence due to having more inventory than that is necessary by the situation. Russ, you want to add something?

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

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Yes. The only thing I would say just on your last comment is that in our industry, because of the fact that you don't really have an issue with respect to longevity, it's very rare to actually have a write-down with respect to finished product. Even if you discontinue something, you can always find a market where you're going to sell it where you can at least recoup your cost. Remember, our margins are extremely high. So the idea it would be to at least recoup the cost of the product. So inventory obsolescence is not something that's very significant in our business.

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [31]

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And I will continue. And in Paris and in New York, we have been able to push out millions of dollars of deliveries of components. So yes, today, I think at the end of March, our inventory level was the same as it was at December 31. But it's going to increase a little bit more in the second quarter just because we don't have the sales, let's that we expected. And let's not forget that we buy -- we place our purchase orders of components, 6 to 7 months in advance of delivery. So of course, today, we have too much. But we think that at the end of third quarter and definitely at the end of fourth quarter, we will be back to something that is very acceptable.

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Operator [32]

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Our next question comes from Steph Wissink with Jefferies.

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Stephanie Marie Schiller Wissink, Jefferies LLC, Research Division - Equity Analyst and MD [33]

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I just have a few follow-ups. The first, maybe Russell this is for you is -- apologies about the background, license minimum. If you have any sort of agreements that would strike some sort of minimum guarantee?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [34]

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Yes. So many of our licenses do have certain minimum guarantees. However, the good news is that we have been working with each and every one of our licensees, pretty much from the day this pandemic first came to -- into existence. And in many cases, we have already received modifications of the license agreement. Our goal is basically to modify these agreements where we pay based upon actual sales. And in most cases, so far, where we have negotiated, we've been able to work with our partners and alleviate the strain of the minimum guarantees.

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Stephanie Marie Schiller Wissink, Jefferies LLC, Research Division - Equity Analyst and MD [35]

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Very helpful. Okay. Second question is just with respect to M&A. As you think about the post-crisis period, are you seeing anything even now around brands that might be loosened up in some portfolios that could be interesting for you to take on?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [36]

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We've been working on quite a few different things prior to the pandemic coming out. I think the fact is that right now, everybody is in basically survival mode. This pandemic has affected, oh, just about every single industry. Certainly, any of the companies that would be potential licensors are also severely affected. So everybody kind of is in their survival mode, doing what they need to do to run their business, to maintain their businesses, to prepare themselves for the post-pandemic opportunities.

So I think that many of the things that we were working on will resurface once things get a little bit back to normal. We really haven't been pursuing anything brand-new during this pandemic. I think our efforts have really been concentrated on business at hand. Jean, do you want to add anything?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [37]

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No. I think that just before the pandemic, we were pursuing a couple of interesting brands that we would like to add to our portfolio and conversations were moving in the right direction. But again, the last 2 months, it will be -- I don't think it's a time to go back to this conversation. People are busy protecting their business, their people. But definitely, in the next -- in the next weeks or months, we will go back to the table and talk to different very interesting brands that we can add to the stable.

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Stephanie Marie Schiller Wissink, Jefferies LLC, Research Division - Equity Analyst and MD [38]

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Great. And then just a final housekeeping. I think I wrote this down but right, Jean, but you said your e-commerce business in China is bigger than bricks and mortar. This correct?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [39]

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Definitely. 3x bigger, something like that.

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Stephanie Marie Schiller Wissink, Jefferies LLC, Research Division - Equity Analyst and MD [40]

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And has that been the case even pre crisis? Or is that what you're seeing currently in this month?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [41]

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It started -- really, for us, it started really almost 1.5 years ago when we developed these programs with Tmall and JD. So we have a very strong distribution in China. Again, some of our brands like Anna Sui or Lanvin, even Coach, are well recognized in China, and that's why we are able to have such a nice e-comm business.

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Operator [42]

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Our next question comes from Hamed Khorsand with BWS Financial.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [43]

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First off, does the pushout in product releases in '20 to 2021, delay your plans for any previously planned releases in 2021?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [44]

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When we work with each of the brands, we work with a calendar of product launches. So I think the answer would be yes. If we launched a master new fragrance family in 2020, we would have gone with a flanker for that family in '21. If we've moved the launch out, the idea would be, you're going to launch your new pillar in 2021, it would be silly to launch a flank or simultaneously with it.

So theoretically, your calendar moves out by the 6-month delay or 7-month delay. It's just as if 2020 didn't exist. I mean, that's kind of how we're really approaching it. It's a rebuilding stage based upon something that came to us so unexpectedly.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [45]

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Okay. How is channel inventory ahead of the plan reopening? Do you think there will be a significant delay as far as the restocking is concerned?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [46]

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I'm sorry, I didn't hear the beginning of the sentence -- of the question.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [47]

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So about -- how is the channel inventory?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [48]

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Yes. The question is with respect to channel inventory, when do we think that we're going to start seeing a restocking. I think we're also in a situation that many of these retail locations closed rather suddenly. So there is an existing inventory that is in the channel. I think it's really going to depend on how the customer -- how acceptable the experience is for the customer to come back to the retail channels and to see where the demand is. And at that point, then you'll get to restocking. But right now, I think that there's plenty of product in the channels it's just that the stores are closed and there's nothing being sold.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [49]

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Okay. And then last question...

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [50]

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The channel -- if I may I, I totally agree with you, Russ, because the stores closed very abruptly. So -- and there was inventory in the stores. But we monitor very carefully the inventory at the wholesale level, at our distributors and agents. And there, the inventory is not high. And that's one of the reasons also that we are able to collect our receivable so well. They are not overstocked. So I don't say that they will reorder immediately as the store open -- after the store open. But it means that a month or 2 after the stores open, we will see reorders from our distributors.

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Hamed Khorsand, BWS Financial Inc. - Principal & Research Analyst [51]

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Okay. And then are you planning any changes to your go-to-market strategy? Are you going to spend more time online -- for the online sales instead of retail?

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Jean Madar, Inter Parfums, Inc. - Chairman, CEO & Co-Founder [52]

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Russ?

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [53]

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We -- it's interesting. It's a good question. We are experimenting with a lot of different online opportunities. Simultaneously, we're working probably with 3 or 4 different online venues, if you will, to see how we can increase our presence with respect to e-commerce. That is a platform that is a strategy that the company is pursuing, but we are still at the very early stages.

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Operator [54]

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Ladies and gentlemen, there are no further questions at this time. I'll turn it back to management for closing remarks.

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Russell Greenberg, Inter Parfums, Inc. - Executive VP, CFO & Director [55]

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Great. Thank you. And thank you all for joining in today's conference call. As usual, if you have further questions, please contact me by e-mail, and I will do my best to get back to you. Please be safe and stay healthy. And have a great day. Bye.

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Operator [56]

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This concludes today's conference. All parties may disconnect. Have a good day.