Interparfums, Inc. (IPAR) Earnings Call Transcript & Summary

Hello and welcome to the Annual Meeting of Stockholders of Inter Parfums, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Mr. Jean Madar. Mr. Madar, the floor is yours.

Good morning. Will the meeting please come to order. As most of you know, I am Jean Madar, Chairman of the Board and Chief Executive Officer of Inter Parfums, Inc., and I would like to take this opportunity to welcome all of you to the 2020 Virtual Annual Meeting of Stockholders of Inter Parfums. This is our first-ever virtual annual meeting. We are holding this meeting virtually due to public health concerns caused by the COVID-19 pandemic as well as the travel, social distancing and meeting restrictions imposed by federal, state and local governments. Therefore, we have decided to hold our annual meeting solely by means of an audio conference that is being broadcast live via a webcast. I will act as the Chairman of the meeting, and Joseph Caccamo, our General Counsel, will act as Secretary of the meeting. Before proceeding with the business of this meeting, there are certain technical, legal matter which we must attend to in order to ensure that we are conducting a duly authorized meeting. As soon as these technicalities are out of the way, I will introduce to you the officers and directors of the company who are present here today, and then I will describe the matters for your consideration and action. The company has designated Sharon Best-Jhagroo of American Stock Transfer as the inspector of election, who has signed and sent us her oath of inspector of election.

Mr. Chairman, I have received her signed and notarized oath of inspector of election.

The record date fixed by the Board of Directors for the determination of stockholders entitled to vote at this meeting was August 11, 2020. The inspector of election has a certified list furnished by American Stock Transfer, the company's transfer agent, of the holders of common stock of the company as of the close of the business on the record date. Will all stockholders present and all holders of proxies for other stockholders, please, if they have not already done so, submit their respective votes online for tabulation. Will the inspector of election kindly read the report of the number of shares of common stock of the company represented at the meeting, either in person or by proxy, and indicate whether there is a quorum of stockholders present in person or by proxy at this meeting.

Thank you, Mr. Chairman. I certify that there are 28,517,856 shares of the Inter Parfums common stock represented in person or by proxy at this meeting.

Okay. So this is 90%, okay. So 10% didn't vote, apparently.

So there's like [ 3,014 ] (sic) [ 3,014,000 ] that's missing.

Some maybe online? If we -- all right. No, because we like to have 100%.

Yes, usually, it's much higher.

All right. That may be because of certain -- okay. The report of the inspector of election indicates that there are present at the meeting, in person or represented by proxy, the holders of the majority of the total number of shares of common stock of the company issued and outstanding and entitled to vote at this meeting. Therefore, there is a quorum present and the meeting is completed to transact business. Will the secretary please give his report?

Mr. Secretary as -- Mr. Chairman, as Secretary of this meeting, I have in my possession a copy of the notice of annual meeting of stockholders dated August 13, 2020, concerning the matters to be considered and acted upon at this meeting as well as a copy of the proxy statement and form of proxy. I also have the transfer agent's affidavit of mailing and a statement of mailing from Broadridge.

Before proceeding further, I would like to introduce to you the people that are here today. So there is me, Jean Madar, Chairman and CEO; and there is also Russ Greenberg, who is the Director, Executive Vice President and also Chief Financial Officer, is with me in New York; and Joe Caccamo, our company Counsel, and also Sharon Best-Jhagroo from American Stock Transfer. So the first order of business is the election of directors to hold office for a term of 1 year until the next Annual Stockholders Meeting and until their successors are elected and qualified. The floor is open for nomination of directors, and I nominate the following individuals: Jean Madar, Philippe Benacin, Russell Greenberg, Philippe Santi, Francois Heilbronn, Robert Bensoussan, Patrick Choel, Michel Dyens, Veronique Gabai-Pinsky and Gilbert Harrison. There being no other nomination, I declare the nominations closed. Second proposal. The second order of business is to vote for the advisory resolution to approve the compensation of our main executive officers. The following proposal is put forth before the stockholders: Resolved that the compensation paid to Inter Parfums' named executive officers as disclosed in accordance with the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and related narrative disclosure included in the proxy statement of Inter Parfums for this annual meeting is hereby approved. We have received the preliminary voting results as of 9:00 a.m. this morning. I understand that due to the fact we are holding the meeting virtually, the final result will be available about an hour or so after the meeting close. Final voting results will be reported in our SEC filings due within the next few days. So on the basis of the preliminary voting results for proposal 1 with about 79% of the vote in, all directors have received an overwhelming majority of the votes for their reelection, ranging from approximately 91% to 99%, and all of the following directors: Jean Madar -- I'm going to review the name again in case you forgot, a review: Jean Madar, Philippe Benacin, Russell Greenberg, even you, Russell, were elected. Philippe Santi, Francois Heilbronn, Robert Bensoussan, Patrick Choel, Michel Dyens, Veronique Gabai-Pinsky, Gilbert Harrison will be reelected as directors of the company to serve a 1-year term and until their successors are elected and qualified. No, we don't have to qualify. So this is democracy. But -- and we got 91% to almost 99%. Nobody voted against me, I understand. I'm afraid that some people did. So let's look at the details, my favorite thing. So Jean Madar, I had 400,000 shares against me; Philippe, 1 million shares, which I understand; Russ, very bad, 2.8 million shares against, but 25 million shares for. Okay. That's quite interesting. Robert, Patrick, Michel Dyens and Gilbert Harrison had maybe the best votes because only 91,000 votes were withheld...

And Michel Dyens.

And 28 million -- and Michel, yes, even Gilbert, and 28 million, for. So Gilbert is very popular with our shareholders, and we are very happy to have this talented director in our company. Number 2, on the basis of the preliminary voting results for proposal 2 with about 79% of the votes in, the proposal to approve the compensation paid to Inter Parfums' executive officers as disclosed in our 2020 proxy statement has received an overwhelming majority of the votes for, approximately 99%, and will be approved. So we had for the compensation 28 million for, 344,000 against, 1,000 abstention. So it's not bad. Following the close of the formal portion of this meeting, we would like to give a brief report to you of the events which are occurring in our company. So I would like to ask Russell Greenberg, our Chief Financial Officer and Director, to give us a quick update. We are now beginning of October, so soon we're going to release the third quarter, which was July, August, September. So Russ, give us an idea of what is going on at Inter Parfums, please.

Excuse me, Jean. This is Joe. Before you -- before we go to the question and answer, you just need to formally close the meeting and that the meeting is adjourned, and then we'll do the presentation and respond to questions.

Okay. Of course. So before we take the questions and before we hear Russ, I would like to -- and there being no further business to be brought before the meeting, the meeting is hereby adjourned. So Russ, can you please tell us. And by the way, if you have questions, you can type your questions in -- on the site, and we will answer all of it.

Okay. So really briefly, 2019 ended quite a while ago, so I'm really not going to go through the information that was included in the 2019 annual report. I think what's more important is the events that have occurred since that time. We have, of course, reported our June results, and they incorporate the effects of the COVID-19 pandemic. The company has made several different disclosures with respect to how it is handling the effects of the pandemic. Certainly, when we announced our results for Q2 of this year, we indicated that this is probably the worst of it. Once we started seeing the effects in March of 2020, the heaviest impact was really in the early parts of April and May. And what we've seen during the ensuing 6 months or so is that each month, things are getting a little bit better and sales are increasing month after month from the devastating results or the negative results that we've seen 4Q -- for the first 6 months. If you remember, the first 6 months, we were down about 43%, 44% of sales. We came in at about $194 million versus $345 million the year before. From an earnings standpoint, earnings were down even further. We were down about 78% to around $0.22 per share as compared to $0.99 per share. We will be reporting our sales in just a couple of weeks from now for Q3, and I can tell you that the remarks we passed with respect to the continuous improvement will be evident when we announce those preliminary sales results. Earnings will come out in early November, and again, the same impact. Clearly, Q2 was the worst of it, and we're really hoping that we can get back to where we were back in 2019. It's going to take a while because there are certain elements of our business that remain impacted. Brick-and-mortar retail is still not quite at the levels that they could be. And even more important is the travel retail sector of our business, which represents somewhere between 15% and 20% of our overall business, clearly, is not going to see a recovery until there is a vaccine, which we're hopeful will be sometime in early 2021. But even once the vaccine is here, we need to get to the point where people are more comfortable traveling internationally and resuming their life as it was prepandemic. So just in closing, on just some of the financial side, we've weathered the storm really, really well. Even the results for the first 6 months, we were -- from operations, we were cash flow positive. The company has sufficient resources in order to certainly survive and thrive as best as possible through this pandemic. We've worked very, very carefully with our customers, watching credit limits. We've worked very, very carefully with our suppliers in maintaining and not letting the inventories get carried away with themselves, and this has resulted in the cash flow type of data that you'll see even as we move into the third quarter of this year. Jean, is there anything you want to add?

No, I will have more comments, detailed comments by market, by line, by countries and territories when we disclose our third quarter. But definitely, we've seen the worst. And the company, of course, is not back to the same level of sales and profitability that we were in 2019, but we are in a much better shape than in the second quarter. We are actually doing better than anticipated. There are certain markets that are opening up a little bit faster than we thought. So we have to now chase some inventory, but it's a good problem to have today. But I will prefer to give more details in our next conference. Okay. So if you have questions, please, you can type them. And because we cannot talk to you directly, but we will see -- we have monitors, and we will see your questions. One? No. Okay. But as you know, Russ Greenberg is in New York. He's available to answer questions from shareholders and analysts. You have our numbers. We have not changed phone number, it's the same. And so if there is no more questions, then I'm going to adjourn the meeting. Thank you. Please stay safe. And the only difference between this virtual meeting and a physical meeting is a giveaway that we give you. But this time, we won't be able to do it. But for next year, I propose that we double the goody bag. So you will have 2 bottles of perfume instead of 1. Thank you, everybody. Have a great day and stay safe. Bye.

Ladies and gentlemen, this concludes the meeting. You may now disconnect, and have a pleasant day.