Inter Parfums, Inc. (NASDAQ:IPAR) Q1 2022 Earnings Conference Call May 11, 2022 11:00 AM ET

Company Participants

Russell Greenberg - Executive Vice President & Chief Financial Officer

Jean Madar - Chief Executive Officer

Conference Call Participants

Linda Bolton-Weiser - D.A. Davidson

Grace Menk - Jefferies

Hamed Khorsand - BWS Financial

Operator

Greetings, and welcome to the Inter Parfums First Quarter 2022 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A brief question-and -- will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

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

Russell Greenberg

Thank you, operator. Good morning, and welcome to our first quarter conference call. As always, 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 calls. 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, 2021, and other reports we file from time to time with the Securities and Exchange Commission. We do not intend to and undertake no obligation to update the information discussed.

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

Moving on to today's business. You may recall that on our year-end conference call, Jean mentioned that sales in January and February were well ahead of budget. Well, March was more of the same. And as a result, 2022 first quarter net sales rose 26% over Q1 2021, which, by the way, was 37% better than Q1, 2020.

For European-based operations, gross profit margin was 66.8% and 65.5% in the first quarters of 2022 and 2021, respectively. The margin gain in 2022 is primarily the result of the stronger US dollar. For US operations, gross profit margin was 53.9% and 53.2% in the first quarter of 2022 and 2021, respectively.

With that improvement due to the significant increase in sales, which allowed us to better absorb fixed costs such as depreciation, mostly of tooling and point-of-sale expenses. Jean will address the array of supply chain issues and what we have done to mitigate their impact.