Greetings, and welcome to the Inter P arfums, Inc. third quarter 2023 conference call and webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, 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 Vice President at The Equity Group and Inter Parfums Investor Relations representative, Karin Daly. Thank you, Daryl. Joining us on the call today will be Chairman and Chief Executive Officer, Jean Madar. 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 their most recent annual report on Form 10-K or subsequent quarterly filings on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and Inter Parfums undertakes no obligation to update the information discussed. As a reminder, Inter Parfums' consolidated results reflect their two business segments, European-based operations and United States-based operations. Certain prestige fragrance products are produced and marketed by European-based operations through their 72% owned French subsidiary, Interparfums SA. It's now my pleasure to turn the call over to Jean Madar. Jean, you may begin. Thank you, Karin. Good morning, everyone, and welcome to our third quarter conference call. Sadly, Michel's mother passed away yesterday and understandably is unable to join us this morning, so I will try my best to cover his financial remarks. Of course, we can arrange follow-up calls upon his return, as needed. Of course, I will be able also, as I'm in New York, to answer questions if you have after the call. The strength of the global fragrance market is still compelling, but no longer growing at a double-digit rates from the last two plus years. Fortunately, and by design, our year-to-date sales growth of 27% clearly indicates our ability to outperform the industry and gain market share. The success of our newer brands has been a growth catalyst for us, along with the excellent sell-through of our legacy brands, which we have enriched with innovative extensions rather than major new product launches. Our production and distribution partners are operating efficiently and effectively to ensure that the omni-channel pipeline of fragrance sellers throughout the world are well-stocked with our merchandise. These drivers produced record third quarter net sales up 31% to $368 million, which set a new record for quarterly net sales in our 35+ years as a public company. For the quarter, foreign exchange rates favorably impacted our net sales by 4%, and new brands represented 7% of the growth, leading to strong organic growth of 20% compared to the prior year period. Diving into detail of our business market for the third quarter, North America, our largest market, grew sales 29%, followed by Western Europe, our second largest region, with 24% growth. We also have seen a steep increase in sales in our smaller markets, particularly in Eastern Europe, the Middle East, and Latin America. Eastern Europe at 72%, Middle East at 48%, and Latin America at 42% growth in the quarter. This is primarily related to a smaller base of sales, coupled with ongoing recovery growth as economy begin to normalize. Asia Pacific, our third largest market, saw growth of 20% in the latest three-month period, driven by sales in Australia and New Zealand. As mentioned in the earnings release yesterday, we continue to see a good sell-out in China, namely for Coach, Montblanc, and Ferragamo, enabling us to manage down our stock in trade levels, which we expect will provide a favorable tailwind in 2024. For the balance of 2023, we continue to anticipate only modest sales growth in China. Please be reminded that China currently represents only a very small portion of our business, and as always, we stand ready to take on this immense market opportunity when the time is right. With respect to our European-based operation, net sales increased 18% during the quarter, primarily driven by our top-performing brands, which are Coach, and Montblanc, with sales increasing 32% and 20%, respectively, compared to the prior year period. Coach fragrance were in high demand during the quarter across nearly all the brand's fragrances, and we enriched the family fragrance with Coach Green and Coach Love. Montblanc fragrance saw solid performance of the Montblanc Legend and Explorer franchises, with an additional boost from the extension launched earlier this year, Montblanc Legend, Platinum. Our owned brands also continue to generate strong sales. Rochas fragrance sales grew 21% during the quarter, surpassing $30 million year to date in 2023, with strength in the Eau de Rochas line and momentum from Rochas Girl Life. Lanvin, the other owned brand, in the absence of any major launches, grew sales by 6% during the quarter. Moving into our U.S.-based operations, net sales grew 64% in the quarter on top of a 45% growth achieved in the same period last year. Donna Karan and DKNY fragrance sales increased 200% compared to the first quarter of 2022, having joined our portfolio in July of last year. This fashion house duo has become our second-largest U.S.-based brand in only one year under our expertise. In August, we introduced our first brand extension for DKNY, called Be Delicious Orchard St., a vibrant scent which capture the energy of New York City, Lower East Side, and the early returns are very promising. We are on track to launch a new blockbuster fragrance for DKNY next summer. GUESS fragrance sales increased 59% during the quarter, primarily driven by the continued demand of all fragrance lines. This significant growth builds upon the 45% sales increase in last year's first quarter. Growing demand for GUESS fragrances has been sparked by the rising popularity of GUESS fashion across the globe, particularly within the U.S., within Asia Pacific, and also Europe. As we reported a few weeks ago, we recently launched the GUESS Originals trio of gender-inclusive fragrances and are now rolling out GUESS Bella Vita Paradiso. We have been working tirelessly on innovation for GUESS to ensure we capture the successful momentum of the brand. We have a rich pipeline of fragrances planned for 2024, including a new pillar launch for GUESS, in addition to GUESS Amore, Elements, Uomo Intenso, and Sexy Skin Metallique. Even in the absence of a new product launch, first quarter Ferragamo fragrance sales were very strong, increasing 55% compared to the same period last year, due to the legacy scents, coupled with sister scents, Signorina and Storie di Seta collections that debuted earlier this year. Beyond the brand's Italian borders, Ferragamo fragrances are strong seller in the Americas. New product are in the pipeline for Ferragamo in 2024. By the way, in two years since we commenced operation in Florence, Italy, we now have about 60 management and staff members and are expanding our brand footprint with Cavalli, but also our Italian affiliate will be distributing all our brands in Italy. As mentioned in the first quarter sales release, we initiated phase one of the Abercrombie & Fitch Fierce distribution rollout. While we began with only introductory distribution in select markets of this iconic fragrance during the first quarter, we are on track to commence the majority of the phase one distribution rollout in Europe before year-end, and launch phase two in Asia, Pacific, and Latin America during 2024. And lastly, touching on Roberto Cavalli and Lacoste, our two most recent license agreements. For Roberto Cavalli, we are set to begin shipping fragrance product in January 2024, and we plan to launch our first extension of Cavalli in the summer of 2024. Of note, we did not buy the prior licenses leftover inventory. Instead, we curated the collection and produced entirely new, fresh goods. Also, we partnered with one of the top luxury retailers and distributors in the Middle East, a concentrated market for the brand, to further expand the brand. We also have summer animation, hair and body fragrance mist, and the Just Cavalli duo on track to see shelves early and mid-summer, respectively. The Lacoste license will take into effect in January 2024, and we have been using the time since the license was signed to develop go-forward strategies, and like Cavalli, we did not buy any existing inventory. The fragrance industry remains competitive as new market participants enter the category. We are not surprised by the increased competition, as we believe there are four significant attractive elements. Number one, I think, is growth. The fragrance market has grown tremendously and is expected to continue to grow in the upper single digits, with new consumers entering the category and existing consumers building out their fragrance wardrobe. The second point is resiliency. Resiliency is a very attractive element. We consider it to be generally recession-proof, as other beauty and consumer segments are hit harder when faced with macroeconomic instability. This is reflected in our successful almost four years of history. The third attractive element is the desirability. Fragrances have a desirable entry price point for consumer who want to invest in their favorite luxury brands without having to purchase the higher-priced luxury goods. And last, the demand. As new consumers enter the category, it is often rare to see these new consumer exit the fragrance market. So from a license perspective, while we actively scout for opportunities to add new brands that further complement our prestige portfolio, we also find that brand owners tend to seek us out because of our size, our expertise, and excellent track record that underserved brand owners are often looking for. Our portfolio, both in legacy and new brands, is in high demand across the globe. Additionally, all of our brands have benefited from newly launched and enhanced e-commerce site in existing markets, in collaboration with our retail customer on their e-commerce site. In fact, our retail sales in the Amazon Premium Beauty category, an invitation-only prestige platform, have soared by an impressive 149% year-to-date through October. The remarkable growth is largely attributed to the successful launches of some of our key franchises, such as Donna Karan and DKNY. We are also developing and implementing omni-channel concepts and compelling content to deliver an integrated consumer experience. Coupled with our ongoing innovation, we are confident in our ability to continue to outpace the overall fragrance market through the end of the year. So now, I will turn to our financial performance. So I will do it for the first time myself, because Michel, as I said before, is not able to join us. So let's try. On a consolidated basis, gross profit increased 29% to $235 million. Within our European-based operation, gross margin declined 90 basis points, primarily due to an unfavorable product mix, as we ship more gift sets in this quarter compared to prior year. On a year-to-date basis, gross margin declined only modestly due to the one-time expense related to inventory, as we reported in the second quarter. Excluding this one-time adjustment, gross margin would have been in line with the nine-month period last year. In our U.S.-based operation, third quarter gross margin expanded approximately 190 basis points from the prior year period, driven by price increases that more than offset inflationary impacts on components that were used for production during the quarter, coupled with ongoing favorable brand and channel mix. Additionally, with our net sales up performance, we are better able to absorb fixed expenses such as depreciation and point of sale expenses than at this time last year. SG&A, as a percentage of net sales, declined to 40.2% from 41.9% in the quarter. On a year-to-date basis, SG&A also declined 190 basis points to 39.8% from 41.7% in the prior year period. In our European-based operation, first quarter SG&A increased 18%, which is comparable to the increase in net sales and generally in line as a percentage of net sales from the prior year period. In our U.S.-based operation, SG&A increased 44% on a 64% increase in net sales. Promotion and advertising are integral parts of the fragrance and beauty industry, and we have, and we will continue to invest heavily to support new product launches, our strongest sellers, and to build brand awareness. Promotion and advertising aggregated $62.8 million and $152.6 million for the current for third quarter and for the nine-month period, as compared to $44.8 million and $125 million for the corresponding periods of the prior year.... Promotion and advertising represented 17.1% and 15.4% of net sales for the current three- and nine-month period, respectively, as compared to 16% and 16.1% for the corresponding periods of 2022. As a reminder, as a part of our strategy, the fourth quarter is typically the heaviest period for promotion and advertising, and we continue to expect to deploy 21% of net sales annually, which allocates approximately the same level of promotion and advertising year to date to the fourth quarter alone. Royalty expenses are included in SG&A, which ticked down slightly from the prior year period to 7.8% of net sales for the quarter, again, due to changes in brand mix. Our operating margins aggregated 23.7% and 23.5% for the current three- and nine-month period, as compared to 23% and 22% for the corresponding period of 2022. We closed the first quarter with working capital of $514 million, including approximately $184 million in cash and cash equivalent and short-term investment, maintaining our working capital ratio of 2.4- 1. We closed the quarter with $129 million of long-term debt associated with the Paris headquarters and the Lacoste license acquisition. From a cash flow perspective, accounts receivable is up 49% from December 31, 2022. Quite reasonable based on 2023 record level sales, and reflects a combination of high volume of shipments towards the end of the third quarter, as well as some payment schedules extended going into the holiday season. Additionally, strong collection activity resulted in days sales outstanding decreasing to 72 days at the close of a quarter, from 80 days at this time last year. Inventory levels at September 30 increased 26% from year-end 2022, in support of our exponential sales growth. We have learned an important lesson from the supply chain issues experienced during the pandemic, and we have aimed to carry more inventory overall, source components from several suppliers, and manufacture products closer to where they are sold to ensure we protect our service levels. Finally, turning to our full year 2023 guidance. As we announced in yesterday's release, we are affirming our full year 2023 net sales guidance of $1.3 billion, or growth of 20% from fiscal year 2022, despite geopolitical tension and a very high fourth quarter 2022 base. We are also... Well, excuse me. We are increasing earnings per diluted share guidance to $4.75 from our prior estimate of $4.55, which represents growth of 26% from the $3.78 for fiscal year 2022. Thanks in great part to the operating leverage afforded by our significant growth. We expect to announce our initial guidance for full year 2024, later this month. So with that, operator, you can open the floor for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for your questions. Our first questions come from the line of Linda Bolton Weiser with D.A. Davidson. Please proceed with your questions. Hello, Linda. Yes, hello. Hi, guys. Hello. Hi. I was wondering, with regard to your comments on China, that your POS grew and so you could work down some retail inventory. How do you feel about your current levels of retail inventory there in China? Do you think there's more reduction that needs to happen, or are things in a good condition, right now? Thanks. Thank you, Linda. So regarding China, this is something that we monitor on a weekly basis. We ask our distributor to give us an idea on the most important accounts like Sephora and department stores, and also the different digital operators. We are in a much better shape than before, and we see an improvement week after week, quarter after quarter. We think that the inventory will be at a normal level when we start the year in 2024. But again, with China, you know, we have been always super conservative, and I think we've been right to be like that, because it's a big country, and things are changing super fast. So we'll take also, even for next year, a conservative approach. But I can definitely notice an improvement in the inventory at store level. Great. Thank you. And then, you know, you know, without Michel here, I'm not sure if you can answer this, but- I'm going to try. I'm going to try. It's my first, so be nice with me. Okay. It's the first time I- Well- I will try to answer, but again, if I'm not... If I don't know, I will tell you I don't know, and will ask someone in the company to answer you in the next couple of hours. But go ahead, Linda. Yeah, and my question is just, with the level of advertising that you're guiding to in the fourth quarter, it does look like gross margin is implied to be sort of improved sequentially. So I would think it would be higher in the fourth quarter versus third quarter because of less gift sets. Does that sound reasonable to you, that it should be higher in the fourth quarter? No, I think you can. For gross margin, I prefer that you use the same margin as the first three quarters. It shouldn't be higher. But as I said, we will spend a very big amount of money in advertising in the fourth quarter to ensure the sell-through at store level. Okay. And then, just my final question is about... I know you don't want to get detailed into 2024 yet, but- Mm-hmm. I'm thinking that Roberto Cavalli and Lacoste can together add $100 million of revenue, roughly. Is that about in the ballpark range? Well, if Michel were here, he would say he cannot answer because we don't have, you know. But I think that, look, Lacoste has been in the fragrance business, and we have disclosed already how much we were doing with the former licensee, Cavalli also. So I think that it's a fair number to use for now. Okay. Thank you very much, Jean. Thank you. I appreciate it. Thank you. Pleasure. Thank you. Our next questions come from the line of Ashley Helgans with Jefferies. Please proceed with your questions. Hey, thanks for taking our questions. Some of your competitors are still taking price. Can you just talk a little bit about where you are in your current pricing journey? And then if you think consumers are- You're talking about pricing? You're talking about pricing? Yeah, yeah. Pricing. Yeah. Yeah. Just where you guys are with your pricing journey, and if you think consumers are gonna start pushing back on price at all? And then maybe any updates you can give us on the travel retail channel? Thanks. Okay. Let's try on pricing. We took a modest pricing earlier in 2023, something around 5%, which more than offset inflationary expenses during the quarter. And we do not expect to take further pricing actions at this time. But because, like you said, we think that some consumers will eventually resist this price increase, that, by the way, has been going on for the last two years. So, we think that our pricing is at the right level, and we will not expect... Except maybe for certain particular SKU, we'll position it a little bit higher. But this is more for marketing reason, not to offset any inflationary expense. So that's about pricing. You wanted to talk about the travel retail? This is your second question. Yes. Yeah. Yes. We see definitely a big improvement for us in travel retail, but again, as opposed to our larger competitors, our business is our base is small on the travel retail. We are roughly at 5% in the beginning of the year, and we are trending now something around 7%-8%. So definitely improvement, definitely more traffic, you know, in the airports. I mean, everybody's traveling, and you can see that business is definitely more active. So we are quite optimistic for travel retail worldwide. If your question is more about travel retail in China, this is, I will say, enough, a point also where we want to be conservative, and we are not putting big numbers for travel retail in China or for Chinese travelers. That's what I can tell you for now. Thank you. I appreciate it. Thank you. Our next questions come from the line of Korinne Wolfmeyer with Piper Sandler. Please proceed with your questions. Hey, good morning. Thanks for taking the question, and congrats on a good quarter. Thank you. I'd like to just touch on the guide for the year. I mean, obviously pretty big step down in the top line growth for Q4, and I know there's some really challenging comps, but can you just provide any color on, you know, maybe why you're not, you know, pushing a little bit higher for Q4, and kind of what you're baking into the guidance for the remainder of the year, and then maybe how we should think about the trajectory into 2024? 2024? I understand Michel's not here, so appreciate any color you can provide. Thank you. I can, I can try. But I knew that someone was going to ask me this question. We have decided to keep the level of sales at, because as you said in your question, we're against a very strong fourth quarter last year. We have increased the EPS numbers because of the results of the third quarter, of course. But we want to maintain this prudence in our numbers. There is some instability in the world, as you know. Two weeks ago, a war started in a very important region for perfume, which is the Middle East. So we have to be prudent, and that's why we prefer to stay conservative in our guidance. That's what I can tell you for now. Great. Thanks so much. And then on the advertising and marketing spend, I mean, you're still planning for that to be fairly heavy. What is your willingness... You know, if we do start to see a heavier slowdown in the top line, what is your willingness to maybe pull back on that spend to preserve, you know, the profitability of the business? Or is that something that you're gonna continue investing in, even if the top line- Yeah, we will continue- A little bit more pressure. Yeah, yeah. Yeah, we will continue to invest. This investment is to ensure that all our retail partners sell out what we ship them. So we did great in the third quarter because we shipped a lot, a lot of products, and it's absolutely necessary to maintain or to increase all our expenses to make sure that our retailers worldwide have a great sell-through, and we can replenish inventory coming first quarter next year. So it will be a very short-term vision to reduce advertising to show a little bit more profit. No, we are here for the long term, and we are here to gain market share, so I'm convinced that this is the right thing to do. Wonderful. Thanks so much. Thank you. Thank you. Our next question has come from the line of Hamed Khorsand with BWS Financial. Please proceed with your questions. Hello, Hamed. Hi. Hi, just wanted to see what kind of spending changes have you seen at the retail level going into the holidays? And are you assuming that the retailers are, you know, as much stocked as they were last year, or you think there's ample room for them to do reorders in Q4? A good question. This is also something that we are monitoring on a daily basis. Retailers are quite prudent. They are not, they have not taken massive inventory. We are delivering daily. I was with many retailers in the last couple of weeks, and they have given us a lot of smaller orders, but more sequenced in order for, I GUESS to receive products in a cadence that is on a weekly basis, and that's what we are doing. So, they are not. They don't have a huge amount of stock, but they are continuing to buy, and we have, I think, orders to ship up to Christmas. So, I think it's a prudent attitude from retailers, but I do not see any issue with their inventory level. Okay. And my other question was, for next year, other than Cavalli and Lacoste, what are you focused on as being important events for Inter Parfums next year? Of course, Cavalli and Lacoste are the new brand in the portfolio. But we are going to concentrate on the five biggest franchise in the portfolio. Number one is being Montblanc, then Coach and Ferragamo, and Jimmy Choo, and GUESS. So these five brands will represent maybe 70% of the sales, and we will continue to invest. And what is very important is that these five big franchise will all have a blockbuster in 2024, where for three out of five we didn't launch any blockbuster in 2023. So this is positive. In a couple of weeks, we're gonna give the sales guidance for 2024. We are optimistic, but prudent, because again, the world conditions, these tensions also are not great for business, and we have to take this into account, of course. Okay, great. Thank you. Thank you. Thank you. We have reached the end of our question and answer session. Ah, great! I'm just kidding. No, because I'm not, I'm not used to this exercise, so that's why I was born. But anyway, I hope I was able to answer the right way. But again, I repeat, if there is more info that you need, we will be happy to have Michel's team answer. You just have to call the office. I'm sorry, operator. Yeah, you wanted to say something else, no? No, I was just gonna hand the call back over to you for closing comments. Okay. So before I end the call, I wanted to touch again on recent geopolitical tensions. As a global business with over 2,200 touchpoints across the globe, we do everything we can to help support our manufacturers and distributors. At Inter Parfums, we are in support of humanitarian efforts and the innocent people experiencing so much pain. We condemn the terrorist attacks in Israel, and we continue to work to find more ways to provide support to our partners, consumers, and all those affected by this war. We hope for a pathway to peace soon. And as I said, if you have additional questions, please contact Karin Daly from The Equity Group, our investor relations consultant. Her telephone number and her address can be found on our most recent earnings release. Since this is our last conference call of the year, Michel and I hope you have a safe and pleasant holiday season and a prosperous New Year. We look forward to the next conference call. Thank you very much, and have a good day. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and enjoy the rest of your day.