Greetings, and welcome to the Inter Parfums' First Quarter 2019 conference call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Russell Greenberg, Executive Vice President and CFO. Thank you, sir. You may begin.

Thank you, operator. Good morning, and welcome to our 2019 First Quarter Conference Call. We will follow our regular format. I will start the call with a discussion of our financial results and then Jean Madar, our Chairman and CEO, will provide an overview of our business and share some of our plans for the future. Then we will take your questions. Before proceeding further, I just 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 headings 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%-owned French subsidiary, Inter Parfums SA. When we discuss our United States-based operations, we are primarily referring to sales of Prestige Fragrance products conducted through our wholly-owned domestic subsidiaries. As I review our first quarter, please keep in mind that the dollar/euro exchange rate was 1.14 compared to 1.23 in the first quarter of 2018. In general, our reported net sales are impacted by changes in foreign currency exchange rates. A strong U.S. dollar has a negative impact on our sales, but a positive effect on our gross profit margin. And the reason for that is because over 45% of the net sales of our European operations are actually denominated in dollars, while almost all costs of our European operations are incurred…

Thank you Russ and good morning to you all. As we reported, we achieved sales growth in our two largest markets with comparable quarter sales growth of 8.5% and 12.7% in North America and Western Europe. The Middle East performed also well with first quarter sales growth of 22.9%, but our third largest market, Asia, experienced a 9.3% comparable quarter decline primarily due to lower sales of Lanvin products. However, we expect better comparisons for Asia in the coming quarters with the launches of Lanvin, A Girl in Capri and Anna Sui, Fantasia Mermaid, a new fragrance. On our last conference call, I noted that we are in a very good position with respect to Asia and we continue to expect growth in the region for 2019. Our third Montblanc pillar, Montblanc Explorer was our major first quarter launch and factored prominently into the 9.9% increase in brand sales. The global rollout is still under way, so we expect favorable comparisons for the brand in the second quarter. I am also pleased to report that we do not see any material cannibalization resulting from this new entrant, because we are being very careful to develop end market products that layer on rather than replace sales. We look for Montblanc to be our biggest percentage gainer in 2019. Jimmy Choo fragrance sales rose 25.7% in the first quarter, which was attributable to the brand's legacy fragrance as well as reintroduction of a Jimmy Choo floral flanker. But more importantly was due to the lasting appeal of the brand's men's and women's fragrance collection. Later in the year, we have a new men's line introducing for our Jimmy Choo brand along with new interpretation of Jimmy Choo Blossom, Illicit and L'eau. In 2020, we will have a new women's pillar in the…

[Operator Instructions] Our first question is coming from Joe Altobello of Raymond James.

I just, first I want to started on the overhead leverage and Russ, you mentioned this earlier, pretty impressive in the quarter, and it sounds like a lot of that was on the U.S. side. So I'm curious how sustainable is that given I would imagine you guys are not expecting 55% top line growth for that segment going forward particularly as you lap GUESS?

No, certainly, nobody is expecting to continue to grow at that level. The GUESS license began in Q2 of 2018. So this was really the last quarter that had a relatively simple comparison from a sales standpoint. However, the level of the operating margins that were achieved are somewhat sustainable. The reality is that when you have such a large increase in sales, you are gaining a tremendous amount of leverage of the SG&A expenses. So the type of levels that we're seeing are sustainable for the future, meaning we don't have to add a lot of SG&A expense to support the current sales levels that we're at. So as we continue to report sales similar levels or increases, we should be able to continue to gain a little bit on the operating leverage from the U.S. operations.

Okay. That's helpful. And if I could just follow-up, any early insights into the Abercrombie Authentic launch, how receptive have retailers been to that, thus far?

We made all our presentations, and we are largely shipping the products to most of the markets. The reaction has been quite good because the product is very coherent with the image of Abercrombie and the juice for men and for women has been very well accepted. We knew that because we did some consumer test before launching. So we're expecting some strong sales from Abercrombie from Authentic this year.

Our next question is coming from Stephanie Wissink of Jefferies.

This is Ashley Helgans on for Stephanie Wissink. We wanted to unpack for summers between department stores and specialty multi. And then is there any other new distribution we should be aware of?

I didn't quite get that. Can you repeat that, please.

Yes, we wanted to unpack the channel performance between department stores and specialty multi? And then just a follow up, is there any new distribution that we should be aware of?

There is no new distribution to say. We continue to sell our products independent, in Europe, it's mostly independent perfumeries or chain of perfumeries, such as Sephora or [indiscernible]. In the U.S., it's mostly department stores, and also Sephora, and the largest account being Macy's. And in Asia, it's a mix of department store and, of course, e-commerce because e-commerce is part of our Asian business is growing at a very fast pace. Just finished a meeting with our distributor in China and we get 20% of our business in China in terms through e-commerce. That's what I can tell you.

Thank you. Our next question is coming from Hamed Khorsand of BWS Financial. Please go ahead.

So Russ, I guess, this question is for you. What's changed in the business significantly because the message you're sending on this call something that brought up in the past, and in the past, you've talked about the operating leverage still being far away. But today, it's the focus point of today's call. So what's dramatically changed that this message is what you're trying to project today?

Well, I think it's very clear that the signing of the GUESS license last year. When you have a brand, that's going to bring somewhere close to $50 million to an existing business that was running little bit under the $100 million. Clearly, it's a little bit of a game changer from a profitability standpoint. In our business and our operations, there's a lot of variable expenses. The fixed expenses, which is primarily salary-related and infrastructure, is something that is very leverageable. So when you take a brand and you can increase your sales by $20 million or $30 million or $40 million over a relatively short period of time, you're going to be able to expand that operating margin. And that's exactly what we've seen here in the first quarter. If you look at some of the details, we did file our quarterly report, and you can see that from the U.S. operations, we will practically at a breakeven in last year's first quarter, which is usually a very mild quarter. But here, with sales increasing 54%, the U.S. operations generated closer to $3 million in profits let alone operating leverage. So that's where we see the future. At this point in time, we don't have to add a lot of money to our infrastructure and the increase in sales is going to support a further expansion of our operating margins.

And can you get current infrastructure handle any expansion as far as the portfolio is concerned?

Absolutely. We are constantly evaluating and looking at other opportunities on both sides of the Atlantic. It's not just the U.S. operations. We're doing the same thing in the European side of our business. We absolutely can add additional brands, additional licenses to our portfolio with a minor or relatively small increase in the SG&A expenses.

Okay. And then any plans to expand Rochas's market exposure this year?

I think we've started to do that, not just this year, but even last year. Rochas was primarily a brand that was sold in Western Europe, primarily for Spain and France. We've moved it out into about 9 to 10 other jurisdictions throughout Western Europe. And I think that plan will continue as time goes on.

At this time, I would like to turn the floor back over to management for any additional or closing comments.

Okay. Thank you, and thank you all for being on the call. Thank you for your questions. Just before signing off, I would like you to know that on May 13, just next week, I will be presenting at the Citi Consumer Staples Access day in New York and on May 30, I will be at the D.A. Davidson Consumer Conference in Chicago. And then, of course, on June 19, I will be at the Jefferies Consumer Conference in Nantucket. Thank you for tuning in to our conference call and as always, if you have further questions, please contact me in my office. Have a great day, and thank you, once again.

Thank you very much.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines at this time, and have a wonderful day.