Interparfums, Inc.

Greetings, and welcome to the Interpower Phones, Inc.' 's second quarter 2025 conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, 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 Interperformance Investor Relations representative. Please go ahead.

Thank you, Joe. Joining us on the call today will be Chairman and Chief Executive Officer, John Madar, and Chief Financial Officer, Michelle Atwood. As a reminder, 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. Forward-looking statements speak only as of the date on which they are made, and Interparfums undertakes no obligation to update the information discussed. Interparfums' consolidated results include two business segments, European-based operations through Interparfums SA's the company's 72% owned French subsidiary, and United States-based operations. With that, it's now my pleasure to turn the call over to Jean Madar. Jean?

Thank you, Karen, and good morning, everyone, and thank you for joining us on today's call. We began the year on a strong note, and that is continuing, but at a slower pace. and with more speed bumps along the way than in recent years. Even so, the measures undertaken months ago, including price increases that will come into effect beginning this month and strategically shifting some of our sourcing and manufacturing, along with product innovation and effective advertising and promotional programs, have enabled us to maintain and fulfill demand for our fragrance products. There is no question that momentum eased in the second quarter for us and many others in our industry, and some of the challenges we faced will likely continue into the second half of the year. That said, our lean, adaptable operating model, combined with the support from our distributor, retail, and manufacturing partners, as well as the proactive and timely actions we have taken, positioned us to fully resolve these challenges by 2026. As we reported last month, for the first six months, organic net sales, which exclude the impact of foreign exchange and the discontinuation of a downhill license, rose 3% with first quarter shipments ahead of budget and second quarter below. European-based operations reported net sales grew 6% in the second quarter and 7% in the first half, with robust performance in the U.S. that outpaced the broader fragrance industry, led by Jimmy Choo Fragrances. In our U.S.-based operations, reported second quarter net sales were down 20%, with 8% of that due to sell-out of the remaining Dunhill inventory last year, which concluded in August. On an organic basis, U.S. operations sales were down 14% in the second quarter and down 6% in the first half. As I review regional performance, I will be focusing on the first half of the year rather than the second quarter, which was unusually volatile this year. We experienced solid growth in our two largest markets, North America and Western Europe. North America sales rose 7% and Western Europe rose 3%. Central and South America sales increased 7% with the success of Lacoste fragrances and also nice growth in coach fragrances and generally a healthy growing market. Sales in Eastern Europe were up 14% as compared to the first half of 2024 when we encountered sourcing constraints at the time. Asia-Pacific fragrance sales were down 12% in the first half. We were against strong sales last year in Australia, but we have very high challenges in South Korea. Positive takeaway for the region is that overall trends in China and Japan become a little bit more favorable. Middle East and Africa declined 19%, and you know it's an important region for us. Reflecting the exit of the Dunhill license, excluding the impact of Dunhill, net sales declined 6%. We have a strong fragrance lineup in the works for the remainder of the year. For our European-based brands, we will be launching the latest edition of the Jimmy Choo I Want You franchise called I Want You With Love. And while Mont Blanc sales were broadly flat during the quarter, we are already encouraged by the promising response to the recent debut of Mont Blanc Explorer Extreme and will continue to strengthen the brand with a new extension to the Mont Blanc Elixir line alongside an exciting addition to Karl Lagerfeld iconic franchise. Since joining our portfolio, Lacoste fragrances have delivered outstanding results and we are eager to build on that momentum with the upcoming introduction of Lacoste Original Fan. We are adding new members also to the Moncler Sommet collection as well. Additionally, we are nearing the debut of our first fragrance release for our own brand called Solferino. This collection of 10 fragrances crafted by master perfumers stays true to artisanal roots through carefully selected distribution and premium merchandising, ensuring a truly exceptional experience for our customers. Next month, we will open our flagship boutique in the heart of Paris. alongside the launch of our e-commerce platform, and the products were just introduced this week at Selfridges in London, allowing us to connect with customers both locally and globally. This marks a new chapter for Interparfums, filled with the promise of growth and discovery in the art of artisanal and luxury fragrance craftsmanship. And the insights we gain will not only enrich this line Solferino, but further empower us to elevate and better serve the entire family of brands within our portfolio. For our US-based operations, we are set to introduce several scents, including Just Cavalli Blockbuster Duo for Roberto Cavalli, plus several extensions for Guess, for BTNY, Ferragamo, and Abercrombie. As announced last month, Interparfum has been selected as the exclusive fragrance licensee for Longchamp, a French leather goods and fashion brand, that was established in 1948 and now has approximately 400 stores across 80 countries. By combining Longchamp's rich heritage and creativity with our expertise in fragrance development, we plan to launch their first ever women's fragrance in 2027. with a focus on Europe and Asia Pacific. So we are very happy to have signed this new freelance license. And of note, there was no upfront fee to obtain this license. Before I hand it over to Michel to discuss the financial results, I want to touch on a few operational updates that have been front and center across the industry. We are seeing strong momentum in our e-commerce channels and expanding our presence, especially on Amazon. Platforms like Divabox and TikTok Shop are also gaining traction and showing promising growth. In fact, we are developing special programs tailored for e-commerce, such as TikTok-specific SKUs, typically smaller size at lower price point, to better meet the expectations of these customers who are often looking for more affordable options. Amazon continues also to be a key focus. The good news is that thanks to our success there, more brands are now willing to sell on Amazon after we demonstrated strong numbers. Their business on Amazon has been growing steadily. It's important to note that Amazon Beauty is very much a control platform, but we can't overlook the platform she has influenced and reached. DivaBox, currently the number two e-commerce platform for fragrance in France, is another exciting area for us. On the traditional retail side, there are no major changes. Big retailers and specialty stores like Macy's and Volta continue to hold steady market share and maintain strong business. As we discussed on our previous call, we are making strong progress and remain on track with a transition out of our own operated facility in Dayton, New Jersey. This move will likely happen just after the summer, with a target to be fully relocated to the new facility and working with a third-party logistics partner by the end of Q3. At that point, we expect to be fully utilizing third-party providers for packing, shipping, warehousing, and order fulfillment. As it relates to tariffs, and I'm sure if you have more questions, I will answer this during the session of the Q&A, but we got some good news recently, the agreement to keep tariffs on goods from Europe at 15% and to eliminate tariffs on US export to Europe. Earlier projections had us bracing for 30% to 50% plus also reciprocal tariffs from Europe. So this is a meaningful improvement even though the increase from 10% to 15% for imports to the U.S. is higher than we had initially planned. The recent agreements finalized with South Korea, Vietnam, and the Philippines, as well as a preliminary deal with China, provide greater clarity on the global trade environment and confirm the immediate action and longer-term plans we put in place three months ago remain the right ones. On our sourcing strategy, first, just to clarify, we do not fill or finish any of our goods in China. That said, we do still source a lot of components from there, including plastic caps, certain pumps, some metal parts, and we have already started moving toward alternative sourcing options outside of China. It's a transition, and there may be some short-term impact, but between these and other steps we are taking, we expect to absorb it without major disruption. Another key step is localizing production. Where it makes sense, we are shifting manufacturing closer to the end market. This is mostly valid for certain SKUs that are produced in the U.S., but where most of the business is in Europe or other regions. This shift will help us to minimize the U.S. import tariffs on components. As it relates to pricing, we have taken a very selective approach, meaning it hasn't been applied across the board. We implemented more aggressive mid-single-digit percentage price increase in the U.S., where the tariff on imported finished goods have had the biggest impact. In other markets, We've generally held entry-level pricing steady on smaller sizes to maintain accessibility while applying more pricing adjustments to larger sizes or on brands that are less price sensitive. Overall, we are looking at approximately 2% average price increase at the total company level, which will progressively take effect between now and the end of the year. The next three months are going to be critical as we focus on the holiday selling. In the first half of the year, sell-through outpaced selling and store inventory levels are still relatively low. It will be a key marker to see how retailers stock up for the holiday season. We already started phase one gift sets and holiday orders and how this phase performs will set the tone. One thing to keep in mind, the holiday seasons continue to shift later and later. If retailers don't carry heavy inventory now, we need to be ready to shift deeper into the season, potentially even into the beginning of December. That puts added pressure on logistics and manufacturing, so we are making sure we are ready to respond quickly. As we continue to navigate the current landscape, we remain confident in our ability to deliver on our goals for the year by making progress across all areas of our business. With that, I will turn it over to Michel Atwood. Michel?