INTERPARFUMS INC 10-Q

Item 1. Financial Statements In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations and cash flows for the interim periods presented. We have condensed such financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, such financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America. In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued by filing with the SEC. These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2023, included in our annual report filed on Form 10-K. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the entire fiscal year. Page 1 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share and per share data) (Unaudited) ASSETS March 31, 2024 December 31, 2023 Current assets: Cash and cash equivalents $ 20,976 $ 88,462 Short-term investments 76,078 94,304 Accounts receivable, net 293,075 247,240 Inventories 400,209 371,859 Receivables, other 5,581 7,012 Other current assets 34,258 29,458 Income taxes receivable 2,490 691 Total current assets 832,667 839,026 Property, equipment and leasehold improvements, net 164,165 169,222 Right-of-use assets, net 26,980 28,613 Trademarks, licenses and other intangible assets, net 288,117 296,356 Deferred tax assets 15,726 14,545 Other assets 21,521 21,567 Total assets $ 1,349,176 $ 1,369,329 LIABILITIES AND EQUITY Current liabilities: Loans payable - banks $ 8,324 $ 4,420 Current portion of long-term debt 29,027 29,587 Current portion of lease liabilities 5,928 5,951 Accounts payable – trade 106,219 97,409 Accrued expenses 135,660 178,880 Income taxes payable 17,300 8,498 Total current liabilities 302,458 324,745 Long–term debt, less current portion 115,926 127,897 Lease liabilities, less current portion 22,905 24,517 Equity: Inter Parfums, Inc. shareholders’ equity: Preferred stock, $ .001 par; authorized 1,000,000 shares; none issued — — Common stock, $ .001 par; authorized 100,000,000 shares; outstanding 32,023,640 and 32,004,660 shares at March 31, 2024 and December 31, 2023, respectively 32 32 Additional paid-in capital 100,309 98,565 Retained earnings 711,043 693,848 Accumulated other comprehensive loss ( 50,417 ) ( 40,188 ) Treasury stock, at cost, 9,981,665 and 9,981,665 shares at March 31, 2024 and December 31, 2023, respectively ( 52,864 ) ( 52,864 ) Total Inter Parfums, Inc. shareholders’ equity 708,103 699,393 Noncontrolling interest 199,784 192,777 Total equity 907,887 892,170 Total liabilities and equity $ 1,349,176 $ 1,369,329 See notes to consolidated financial statements. Page 2 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net sales $ 323,963 $ 311,723 Cost of sales 121,578 108,766 Gross margin 202,385 202,957 Selling, general and administrative expenses 134,412 112,678 Income from operations 67,973 90,279 Other expenses (income): Interest expense 1,807 2,357 (Gain) loss on foreign currency ( 905 ) 759 Interest and investment income ( 3,020 ) ( 5,382 ) Other expense (income) 38 ( 41 ) Nonoperating Income (Expense) ( 2,080 ) ( 2,307 ) Income before income taxes 70,053 92,586 Income taxes 16,750 21,678 Net income 53,303 70,908 Less: Net income attributable to the noncontrolling interest 12,255 16,840 Net income attributable to Inter Parfums, Inc. $ 41,048 $ 54,068 Earnings per share: Net income attributable to Inter Parfums, Inc. common shareholders: Basic $ 1.28 $ 1.69 Diluted $ 1.27 $ 1.68 Weighted average number of shares outstanding: Basic 32,041 32,018 Diluted 32,266 32,159 Dividends declared per share $ 0.75 $ 0.625 See notes to consolidated financial statements. Page 3 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Three Months Ended March 31, 2024 2023 Comprehensive income: Net income $ 53,303 $ 70,908 Other comprehensive income: Net derivative instrument loss, net of tax ( 956 ) ( 4,166 ) Transfer from OCI into earnings 64 1,709 Translation adjustments, net of tax ( 14,582 ) 13,489 Comprehensive income 37,829 81,940 Comprehensive income attributable to the noncontrolling interests: Net income 12,255 16,840 Other comprehensive income: Net derivative instrument loss, net of tax ( 228 ) ( 206 ) Translation adjustments, net of tax ( 5,017 ) 3,622 Comprehensive income attributable to the noncontrolling interests 7,010 20,256 Comprehensive income attributable to Inter Parfums, Inc. $ 30,819 $ 61,684 See notes to consolidated financial statements. Page 4 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In thousands) (Unaudited) Three months ended March 31, 2024 2023 Common stock, beginning and end of period $ 32 $ 32 - - 32 32 Additional paid-in capital, beginning of period 98,565 90,186 Shares issued upon exercise of stock options 1,326 4,929 Share-based compensation 261 314 Transfer of subsidiary shares purchased 157 — Additional paid-in capital, end of period 100,309 95,429 Retained earnings, beginning of period 693,848 620,095 Net income 41,048 54,068 Dividends ( 24,032 ) ( 20,023 ) Share-based compensation 179 300 Retained earnings, end of period 711,043 654,440 Accumulated other comprehensive loss, beginning of period ( 40,188 ) ( 56,056 ) Foreign currency translation adjustment, net of tax ( 9,565 ) 9,867 Transfer from other comprehensive income into earnings 64 1,709 Net derivative instrument loss, net of tax ( 728 ) ( 3,960 ) Accumulated other comprehensive loss, end of period ( 50,417 ) ( 48,440 ) Treasury stock, beginning of period ( 52,864 ) ( 37,475 ) Shares repurchased — ( 5,580 ) Treasury stock, end of period ( 52,864 ) ( 43,055 ) Noncontrolling interest, beginning of period 192,777 171,364 Net income 12,255 16,840 Foreign currency translation adjustment, net of tax ( 5,017 ) 3,622 Net derivative instrument loss, net of tax ( 228 ) ( 206 ) Share-based compensation 154 54 Transfer of subsidiary shares purchased ( 157 ) — Dividends — ( 473 ) Noncontrolling interest, end of period 199,784 191,201 892,170 788,146 53,303 70.908 Total equity $ 907,887 $ 849,607 See notes to consolidated financial statements. Page 5 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three months ended March 31, 2024 2023 Cash flows from operating activities: Net income $ 53,303 $ 70,908 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 6,018 4,115 Provision for doubtful accounts ( 153 ) 220 Noncash stock compensation 589 633 Share of income of equity investment 32 ( 41 ) Noncash lease expense 1,485 1,324 Deferred tax provision ( 1,461 ) ( 1,188 ) Change in fair value of derivatives ( 24 ) 1,518 Changes in: Accounts receivable ( 50,436 ) ( 42,670 ) Inventories ( 34,388 ) ( 29,688 ) Other assets ( 5,245 ) ( 5,640 ) Operating lease liabilities ( 1,468 ) ( 1,293 ) Accounts payable and accrued expenses ( 27,736 ) ( 23,327 ) Income taxes, net 7,524 17,771 Net cash used in operating activities ( 51,960 ) ( 7,358 ) Cash flows from investing activities: Purchases of short-term investments ( 59,619 ) ( 42,835 ) Proceeds from sale of short-term investments 74,905 107,045 Purchases of property, equipment and leasehold improvements ( 1,059 ) ( 2,415 ) Payment for intangible assets acquired ( 305 ) ( 151 ) Net cash provided by investing activities 13,922 61,644 Cash flows from financing activities: Proceeds from loans payable, bank 4,000 — Proceeds from issuance of long-term debt — 17,989 Repayment of long-term debt ( 9,425 ) ( 9,397 ) Proceeds from exercise of options 1,326 4,929 Dividends paid ( 24,032 ) ( 20,023 ) Dividends paid to noncontrolling interest — ( 473 ) Purchase of treasury stock — ( 5,580 ) Net cash used in financing activities ( 28,131 ) ( 12,555 ) Effect of exchange rate changes on cash ( 1,317 ) 2,611 Net (decrease) increase in cash and cash equivalents ( 67,486 ) 44,342 Cash and cash equivalents - beginning of period 88,462 104,713 Cash and cash equivalents - end of period $ 20,976 $ 149,055 Supplemental disclosure of cash flow information: Cash paid for: Interest $ 1,127 $ 1,563 Income taxes 10,479 4,816 See notes to consolidated financial statements. Page 6 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 1. Significant Accounting Policies: The accounting policies we follow are set forth in the notes to our consolidated financial statements included in our Form 10-K, which was filed with the Securities and Exchange Commission for the year ended December 31, 2023. 2. Recent Agreements: Abercrombie & Fitch In 2023, we announced our agreement to distribute Abercrombie & Fitch’s number one men’s fragrance , Fierce , in selected markets. The first phase of the agreement, which became effective on September 1, 2023, covers Fierce distribution in certain major markets, including Europe, Mexico and Australia. The second phase, which activated in February 2024, covers distribution in additional markets in Western Europe and Latin America, and may include other flankers of the Fierce family of products. Roberto Cavalli In July 2023, we closed a transaction agreement with Roberto Cavalli, whereby an exclusive and worldwide license was granted for the production and distribution of Roberto Cavalli brand perfumes and fragrance related products. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license became effective in July 2023 and will last for 6.5 years. We began shipping Roberto Cavalli perfumes and fragrance related products in February 2024. Lacoste In December 2022, we closed a transaction agreement with Lacoste, whereby an exclusive and worldwide license was granted for the production and distribution of Lacoste brand perfumes and cosmetics. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The license became effective in January 2024 and will last for 15 years. We began shipping Lacoste fragrances in January 2024. Dunhill The Dunhill fragrance license expired on September 30, 2023 and was not renewed. The Company has a twelve-month sell-off period during which it will maintain the right to sell-off remaining Dunhill fragrance inventory, which is customary in the fragrance industry. All usable components have been converted to finished goods, and any remaining components will be destroyed. Rochas Fashion As a result of operational challenges faced by the Rochas Fashion business in prior years, we took a $2.4 million impairment charge and a $6.8 million impairment charge on our Rochas fashion trademark in the first quarter of 2021 and the fourth quarter of 2022, respectively. In 2023, the Rochas teams underwent a strategic shift to take over their own brand operations, exiting contracts with manufacturers and distributors to make this new structure operational beginning in 2024. An independent expert concluded that the valuation based on this new business model would not require additional impairments as of December 31, 2023. There have been no triggering events in the first quarter of 2024 to require additional impairment analysis. Page 7 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Land and Building Acquisition - Headquarters in Paris In April 2021, Interparfums SA, our 72 % owned French Subsidiary, completed the acquisition of its headquarters at 10 rue de Solférino in the 7th arrondissement of Paris from the property developer. This is an office complex combining three buildings connected by two inner courtyards, and consists of approximately 40,000 total sq. ft. The purchase price included the complete renovation of the site. As of March 31, 2024, $ 151 million (€ 139 million) of the purchase price, including approximately $ 3.1 million of acquisition costs, is included in property, equipment and leasehold improvements on the accompanying consolidated balance sheet. The purchase price has been allocated approximately $ 61.9 million (€ 57 million) to land and $ 88.8 million (€ 82 million) to the building. The building, which was delivered on February 28, 2022, includes the building structure, development of the property, façade waterproofing, general and technical installations and interior fittings that will be depreciated over a range of 7 to 50 years. The Company has elected to depreciate the building cost based on the useful lives of its components. As of March 31, 2024, there was no cash held in escrow included in property, equipment and leasehold improvements on the accompanying consolidated balance sheet. The acquisition was financed by a 10 -year € 120 million (approximately $ 129.7 million) bank loan which bears interest at one-month Euribor plus 0.75% . Approximately € 80 million of the variable rate debt was swapped for variable interest rate debt with a maximum rate of 2 % per annum. The swap effectively exchanges the variable interest rate to a fixed rate of approximately 1.1 %. 3. Recent Accounting Pronouncements: There are no recent accounting pronouncements issued but not yet adopted that would have a material effect on our consolidated financial statements. 4. Inventories: Inventories consist of the following: (In thousands) March 31, 2024 December 31, 2023 Raw materials and component parts $ 178,678 $ 158,733 Finished goods 221,531 213,126 $ 400,209 $ 371,859 Page 8 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 5. Fair Value Measurement: The following tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Fair Value Measurements at March 31, 2024 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Short-term investments $ 76,078 $ 10,379 $ 65,699 $ — Interest rate swaps 4,096 — 4,096 — Foreign currency forward exchange contracts not accounted for using hedge accounting 395 — 395 — Foreign currency forward exchange contracts accounted for using hedge accounting 305 $ — 305 — $ 80,874 $ 10,379 $ 70,495 $ — Fair Value Measurements at December 31, 2023 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Short-term investments $ 94,304 $ 12,868 $ 80,614 $ 822 Interest rate swaps 3,909 — 3,909 — Foreign currency forward exchange contracts not accounted for using hedge accounting 359 — 359 — Foreign currency forward exchange contracts accounted for using hedge accounting 1,533 — 1,533 — $ 100,105 $ 12,868 $ 86,415 $ 822 The carrying amount of cash and cash equivalents, short-term investments including money market funds and marketable equity securities, accounts receivable, other receivables, accounts payable and accrued expenses approximate fair value due to the short terms to maturity of these instruments. The carrying amount of loans payable approximates fair value as the interest rates on the Company’s indebtedness approximate current market rates. The fair value of the Company’s long-term debt was estimated based on the current rates offered to companies for debt with the same remaining maturities and is approximately equal to its carrying value. Page 9 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Foreign currency forward exchange contracts are valued based on quotations from financial institutions and the value of interest rate swaps is the discounted net present value of the swaps using third party quotes from financial institutions. 6. Derivative Financial Instruments: The Company enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Before entering into a derivative transaction for hedging purposes, it is determined that a high degree of initial effectiveness exists between the change in value of the hedged item and the change in the value of the derivative instrument from movement in exchange rates. High effectiveness means that the change in the cash flows of the derivative instrument will effectively offset the change in the cash flows of the hedged item. The effectiveness of each hedged item is measured throughout the hedged period and is based on the dollar offset methodology and excludes the portion of the fair value of the foreign currency forward exchange contract attributable to the change in spot-forward difference which is reported in current period earnings. Any hedge ineffectiveness is also recognized as a gain or loss on foreign currency in the income statement. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued, and gains and losses accumulated in other comprehensive income are reclassified to earnings. If it is probable that the forecasted transaction will no longer occur, then any gains or losses accumulated in other comprehensive income are reclassified to current-period earnings. In December 2022, to finance the acquisition of the Lacoste trademark, the Company entered into a € 50 million (approximately $ 54.1 million ) 4 -year term loan with a variable interest rate. This variable rate debt was swapped for variable interest rate debt with a maximum rate of 2 % per annum. This swap is a hedged derivative instrument and is therefore recorded at fair value and changes in fair value are reflected in other comprehensive income. In connection with the April 2021 acquisition of the office building complex in Paris, € 120 million (approximately $ 129.7 million) of the purchase price was financed through a 10 -year term loan. The Company entered into interest rate swap contracts related to € 80 million of the loan, effectively exchanging the variable interest rate to a fixed rate of approximately 1.1 %. This derivative instrument is recorded at fair value and changes in fair value are reflected in the accompanying consolidated statements of income. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income (loss) and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated statements of income. Such gains and losses were immaterial for both the three months ended March 31, 2024 and 2023. All derivative instruments are reported as either assets or liabilities on the consolidated balance sheet measured at fair value. The valuation of interest rate swaps is included in long-term debt on the accompanying consolidated balance sheets. The valuation of foreign currency forward exchange contracts at March 31, 2024, resulted in a net asset and is included in other current assets on the accompanying consolidated balance sheet. Page 10 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements At March 31, 2024, the Company had foreign currency contracts in the form of forward exchange contracts with notional amounts of approximately U.S. $ 78.0 million and GB £ 4.7 million which all have maturities of less than one year. 7. Leases: The Company leases its offices and warehouses, vehicles, and certain office equipment, substantially all of which are classified as operating leases. The Company currently has no material financing leases. The Company determines if an arrangement is a lease at inception. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend or terminate, depending on the lease. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date for the location in which the lease is held in determining the present value of lease payments. As of March 31, 2024, the weighted average remaining lease term was 4.8 years and the weighted average discount rate used to determine the operating lease liability was 3 %. Rental expense related to operating leases was $ 1.6 million and $ 1.4 million for the three months ended March 31, 2024 and 2023, respectively. Operating lease payments included in operating cash flows totaled $ 1.5 million and $ 1.3 million for the three months ended March 31, 2024 and 2023, respectively. There were $0.2 million of noncash additions to operating lease assets for the three months ended March 31, 2024 and no noncash additions to operating lease assets for the three months ended March 31, 2023. 8. Share-Based Payments: The Company maintains a stock option program for key employees, executives and directors. The plans, all of which have been approved by shareholder vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year term and vest over a four to five -year period. The fair value of shares vested during the three months ended March 31, 2024 and 2023 aggregated $ 0.04 million and $ 0.09 million , respectively. Compensation cost, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period for the entire award. Forfeitures are estimated based on historic trends. It is generally our policy to issue new shares upon exercise of stock options. The following table sets forth information with respect to nonvested options for the three months ended March 31, 2024: Number of Shares Weighted Average Grant-Date Fair Value Nonvested options – beginning of period 122,100 $ 24.47 Nonvested options granted — — Nonvested options vested or forfeited ( 3,140 ) $ 11.86 Nonvested options – end of period 118,960 $ 24.80 Page 11 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Share-based payment expense decreased income before income taxes by $ 0.59 million and $ 0.63 million for the three months ended March 31, 2024 and 2023, respectively, and decreased income attributable to Inter Parfums, Inc. by $ 0.39 million and $ 0.43 million for the three months ended March 31, 2024 and 2023, respectively. The following table summarizes stock option information as of March 31, 2024: Shares Weighted Average Exercise Price Outstanding at January 1, 2024 308,970 $ 86.52 Options forfeited ( 140 ) 73.09 Options exercised ( 18,980 ) 69.87 Outstanding at March 31, 2024 289,850 $ 87.62 Options exercisable 170,890 $ 70.60 Options available for future grants 537,505 As of March 31, 2024, the weighted average remaining contractual life of options outstanding is 2.69 years ( 0.5 years for options exercisable); the aggregate intrinsic value of options outstanding and options exercisable is $ 15.7 million and $ 11.9 million , respectively; and unrecognized compensation cost related to stock options outstanding aggregated $ 2.7 million. Cash proceeds, tax benefits and intrinsic value related to stock options exercised during the three months ended March 31, 2024 and 2023 were as follows: (In thousands) March 31, 2024 March 31, 2023 Cash proceeds from stock options exercised $ 1,326 $ 4,929 Tax benefits 220 780 Intrinsic value of stock options exercised 1,375 5,403 There were no options granted during the three months ended March 31, 2024 and March 31, 2023. Expected volatility is estimated based on historic volatility of the Company’s common stock. The expected term of the option is estimated based on historic data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors maintain its current payout ratio as a percentage of earnings. In March 2022, Interparfums SA, our 72% owned French Subsidiary, approved a plan to grant an aggregate of 88,400 shares of its stock to all Interparfums SA employees and corporate officers having more than six months of employment at grant date, subject to certain corporate performance conditions. The shares, subject to adjustment for stock splits, will be distributed in June 2025. The fair value of the grant had been determined based on the quoted stock price of Interparfums SA shares as reported by the Euronext on the date of grant. The estimated number of shares to be distributed of 93,612 has been determined taking into account employee turnover. The aggregate cost of the grant of approximately $ 4.2 million will be recognized as compensation cost on a straight-line basis over the requisite three and a quarter year service period. Page 12 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In order to avoid dilution of the Company’s ownership of Interparfums SA, all shares distributed or to be distributed pursuant to these plans will be pre-existing shares of Interparfums SA, purchased in the open market by Interparfums SA. As of March 31, 2024 the Company acquired 87,609 shares at an aggregate cost of $ 4.1 million . All share purchases and issuances have been classified as equity transactions on the accompanying balance sheet. 9. Net Income Attributable to Inter Parfums, Inc. Common Shareholders: Net income attributable to Inter Parfums, Inc. per common share (“basic EPS”) is computed by dividing net income attributable to Inter Parfums, Inc. by the weighted average number of shares outstanding. Net income attributable to Inter Parfums, Inc. per share assuming dilution (“diluted EPS”), is computed using the weighted average number of shares outstanding, plus the incremental shares outstanding assuming the exercise of dilutive stock options using the treasury stock method. The reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows: Three months ended (In thousands) March 31, 2024 2023 Numerator: Net income attributable to Inter Parfums, Inc. $ 41,048 $ 54,068 Denominator: Weighted average shares 32,041 32,018 Effect of dilutive securities: Stock options 225 141 Denominator for diluted earnings per share 32,266 32,159 Earnings per share: Net income attributable to Inter Parfums, Inc. common shareholders: Basic $ 1.28 $ 1.69 Diluted 1.27 1.68 Not included in the above computations are the effect of antidilutive potential common shares which consist of outstanding options to purchase 0.05 million shares of common stock for the three months ended March 31, 2024. There were no antidilutive potential common shares outstanding for the three months ended March 31, 2023. Page 13 INTER PARFUMS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 10. Segment and Geographic Areas: The Company manufactures and distributes one product line, fragrances and fragrance related products. The Company manages its business in two segments, European based operations and United States based operations. The European assets are located, and operations are primarily conducted, in France. Both European based operations and United States based operations primarily represent the sale of prestige brand name fragrances. Information on our operations by segments is as follows: (In thousands) Three months ended March 31, 2024 2023 Net sales: United States $ 95,768 $ 81,454 Europe 230,957 230,269 Eliminations of intercompany sales ( 2,762 ) — $ 323,963 $ 311,723 Net income attributable to Inter Parfums, Inc.: United States $ 9,527 $ 10,343 Europe 32,685 43,725 Eliminations ( 1,164 ) — $ 41,048 $ 54,068 March 31, December 31, 2024 2023 Total Assets: United States $ 337,876 $ 344,341 Europe 1,069,258 1,066,684 Eliminations ( 57,958 ) ( 41,696 ) $ 1,349,176 $ 1,369,329 Page 14 INTER PARFUMS, INC. AND SUBSIDIARIES