Interparfums, Inc.

Greetings and welcome to INTED Parfum, Inc.' 's 2024 Third Quarter Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. At this time, I'd like to turn the call over to Karen Daly, Vice President at the Equity Group, and Interperfumes Investor Relations Representative. Thank you. You may begin.

Thank you, Diego, and good morning, everyone. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar, and Chief Financial Officer, Michelle Atwood. On behalf of the company, I would like to note 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 may be found in the company's filings with the Securities and Exchange Commission under the headings Forward Looking Statements and Risk Factors in its most recent annual report on Form 10-K. Forward Looking Statements speak only as of the date on which they are made, and Interpark Rooms undertakes no obligation to update the information discussed. As a reminder, consolidated results reflect the company's two business segments, European-based operations through its 72% owned French subsidiary headquartered in Paris, Interparfums S.A., and United States-based operations through its wholly owned subsidiaries headquartered in New York. It's now my pleasure to turn the call over to Mr. Jean Madar. Jean? Jean?

Thank you, Karen, and good morning, everyone, and thank you for joining us today. Once again, I'm happy to report that the fragrance market remains robust and is continuing to grow, but, of course, at a more sustainable pace than in the past two years. A strong market only goes so far. Equally important to our success is our ability to swiftly adapt to changing consumers' preferences, nutrients, as well as the ever-changing challenges of a global business, while delivering our products sustainably and efficiently to our retailers and distributors. Historically, our third quarter has been our strongest quarter. owing to the pre-holiday season shipments, and the third quarter of this year did not disappoint. In terms of sales, it was not only the best third quarter, but also the best quarter in our history. Michel, in a couple of minutes, will provide insight into our financial results. So third quarter sales across all markets were strong. our three largest markets, North America, Western Europe, and Asia Pacific, grew sales by 12% for North America, 25% for Western Europe, and even 15% for Asia Pacific. Central and South America sales also continued on its positive trajectory with a 20% growth. Sales in Eastern Europe increased bounced back after being impacted by sourcing constraints earlier in the year, achieving third-quarter sales growth of 23%. Also, our travel retail business continues to strengthen, slowly but surely. In the first nine months of the year, it has increased 24% from this time last year, representing approximately today 7% of net sales, getting us closer to our target of 10% of annual net sales. Regarding our presence in China, we recognize that we are currently under-penetrated in this market and we are fortunate to have remained insulated from the huge volatility and challenges that many companies in our industry faced in this region. We have been closely monitoring the region and determined that the timing for entry is not yet right. At this time, we are in the initial stages of developing a strategic promotional program aimed at accelerating growth in the Chinese market, but only in 2026 in a very measured fashion. From a channel perspective, For the first nine months of 2024, direct sales to retailers and travel retail represented approximately 37% of our net sales, up from 35% one year earlier. Direct sales are primarily in the US, in France, and in Italy. While retailers are adopting a leaner inventory approach, our product sales have remained strong despite the reduced stock available on store shelves. And since the majority of our net sales are conducted through our global network of distributors, we are as committed to them as ever in terms of point-of-sales advertising and promotional support, product development, and marketing. With an increase of sales direct to retailers, we are also seeing an uptick in our promotional gift set program. Gift sets are a fundamental offering in the beauty industry and deliver highly desired value for our retailers' customers. While demand is not as high as we have seen across our U.S. consumers, we are seeing growing demand for gift sets across Europe and even in the Middle East. During the summer, we fulfilled initial orders of gift sets and achieved healthy sellout, plus strong reorders in the fall. Our retailers are now restocked and well-prepared to serve their customers ahead of the holiday season. Turning to our strategic initiatives, Our success reflects the consistent art performance of many of our prestige brands and the resilience of our team members who tirelessly ensure operational excellence throughout our organization. There have been key areas of improvement this year that are in large part driving our results, which include our advertising and promotional programs and footfall spread of new products. Regarding our advertising and promotional program, we have continued to focus on social media and, to a lesser extent, legacy programs such as billboard, TV, and print media. During the first quarter and throughout the entire year, we increased our content creation by expanding our high-caliber campaign across Instagram and TikTok to great success. We are also expanding into user-generated content to encourage purchases through highly engaged social media. Influencers who hold considerable sway in the world of beauty and fashion and increasingly include male influencers. Women's Wear Daily reported that Amazon did $250 million in men's fragrance sales last year, up 43% from the prior year, while Amazon women's fragrance business grew 34%. The article called out Montblanc as one of Amazon's bestsellers, while women's fragrance sales have traditionally outpaced men's, Recent trends show that the gap between them is narrowing. At Interparfums, the integration of influencers and new digital platforms is becoming a central axis of marketing strategies, guaranteeing greater proximity with consumers and agility in the face of market changes. We also regularly coordinate with our brand's fashion houses, resulting in both partners benefiting from the synergies of brand recognition and appreciation. For instance, our latest Oscar de la Renta fragrance called New York Eau de Parfum was featured at New York Fashion Week and in Vogue magazine. Also noteworthy at the Marie Claire US Fragrance Awards event, our Donna Karan Kashmir collection was selected this year's Best Fragrance Collection, and Oscar de la Renta Alibi Pop was chosen as Best Eau de Toilette. Turning to our pipeline of product launches, during the quarter, we began distributing new scents for the Montclair, called Les Sommets Collection, in the Middle East, which will go full scale in 2025. Also, debuting were Oscar de la Renta New York Eau de Parfum, as mentioned earlier, and a new flanker for Lanvin's Modern Princess. We also introduced extensions for guests with Uomo Intenso and MCM Diamond, a new look and scent of a backpack pillar. We have also captured lots of media attention with an ultra-deluxe, limited-edition version of MCM award-winning fragrance, MCM Eau de Parfum, which is embellished by hand with approximately 1,100 Swarovski crystals. Our new DKNY Blockbuster fragrance, DKNY 24-7, is doing very well, and we are expanding its geographic distribution to new markets, as well as fulfilling reorders from initial customers. As we mentioned in our third quarter sales release, the DKNY Dona Karan brand duo is on its way to be our next 100 million brand. We are also continuing the global rollout of Roberto Cavalli, Sweet Ferocious, and Lacoste Original. These two new brands' combined sales are expected to add approximately 100 million in incremental sales in year one. We have a good lineup of new products launches in the coming year. For our second largest European-based brand, Mont Blanc, we will welcome a new pillar. Similarly, new pillars will be unveiled for Rochas and Karl Lagerfeld. We are also growing the Mont Blanc Explorer, Jimmy Choo Man, and Coach for Men and Women Fragrance Families. The same for our Kate Spade, Montclair, Van Cleef collections. For Lacoste, the original man and woman and L12 lines will be expanded. And of course, our own 10-cent luxury fragrance collection named Solferino Paris will begin limited distribution in the summer of 2025. The collection was designed to compete with niche fragrances by bringing our scale and knowledge of this category and the power of our distribution which should enable us to make this startup a success. Furthermore, since we are not paying the usual royalties to the brand owner because we own the brand, we can put that money to good use in A&P. For our US-based operation, we will unveil new pillars across several of our brands, including two new scents for the Dona Cara and Kashmir collection, a blockbuster duo for Abercrombie & Fitch, plus new lines for Roberto Cavalli, Ferragamo, and Ungaro. We will also be introducing new extensions for several guest fragrance families, and for MCM, and enlarging the range of personal care products within each brand, such as mists and creams. Boosting our momentum, our Italian subsidiary that has been serving as a distribution hub across all the brands since January continues to perform favorably. Online sales are also trending positively across Europe as we leverage our US-based e-commerce experience to capture further sales. We are confident in our product expertise, strong brand relationships, and efficient distribution capabilities. Together with the dynamic market, we believe we can achieve our net sales target and set yet another record in 2024. I will now turn the call over to Michel, our CFO, for a detailed financial review.