Inter Parfums Inc. (NASDAQ:IPAR) Q3 2019 Earnings Conference Call Transcript
Nov 06, 2019 • 11:00 am ET
Greetings and welcome to the Inter Parfums' Third Quarter 2019 Conference Call. [Operator Instructions].
It's now my pleasure to turn the call over to Russ Greenberg. Please go ahead sir.
Thank you. Good morning and welcome to our 2019 third quarter conference call. We will again proceed with our standard format. After I review our financial performance Jean Madar our Chairman and CEO will provide an overview of our business and share some future plans. Then we will take your questions. Before proceeding further I want to remind listeners 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 include but are not limited to the risks and uncertainties discussed under the heading Forward-Looking Statements and Risk Factors in our annual report on Form 10-K and the reports we file from time to time with the Securities and Exchange Commission.
We do not intend to and undertake no duty to update the information discussed. When we refer to our European based operations, we are primarily talking about sales of prestige fragrance products conducted through our 73% own French subsidiary into performs sa when we discuss our United States based operations. We are primarily referring to sales of prestige fragrance products conducted through our holy own domestic subsidiaries. The average the euro exchange rate for the 2019 third quarter is 1.11 compared to 1.16 in the third quarter of 2018. For the nine months ended September 30 2019 and 2018, the dollar euro exchange rate was 1.12 and 1.19 respectively.
As a reminder a strong U.S. dollar has a negative impact on our net sales but a positive effect on our gross profit margin. Because over 45% of net sales of our European operations are denominated in dollars while almost all costs within our European operations are incurred in euro. With regard to the current third quarter as compared to last year's net sales were $191.2 million up 7.9% from $177.2 million. At comparable foreign currency exchange rates net sales increased 9.7%. Net sales by European-based operations rose 4.2% to $143.6 million from $137.8 million. Net sales by U.S.-based operations rose 20.7% to $47.6 million from $39.4 million. Gross margin was 59.8% compared to 61.6%. SG&A expenses as a percentage of net sales were 40.7% compared to 41.9%. Operating income increased 4.8% to $36.6 million from $35 million and operating margin was 19.2% compared to 19.7%. Our effective income tax rate came in at 27.4% as compared to last year's third quarter at 28.6%.
Net income attributable to Inter Parfums Inc. increased 10.1% to $20.8 million from $18.9 million. And net income per diluted share rose 10% to $0.66 from $0.60. Thus through the first nine months of 2019 and net sales increased 7.5% to $535.7 million as compared to $498.3 million for corresponding period of the prior year. At comparable foreign currency exchange rates net sales increased 10.2% for