Inter Parfums (NasdaqGS:IPAR) Q4 2025 Earnings call February 25, 2026 11:00 AM ET Company ParticipantsAron Adamski - AssociateDevin Sullivan - Managing DirectorHamed Khorsand - Principal and Director of ResearchJean Madar - Chairman and CEOMichel Atwood - CFOConference Call ParticipantsSusan Anderson - Managing Director and Senior AnalystSydney Wagner - Consumer Equity Research AnalystOperatorGreetings, welcome to the Inter Parfums Fourth Quarter 2025 Conference Call and webcast. At this time, all participa ...

Operational focus has shifted toward capital discipline, evidenced by a 14.2% year-over-year reduction in controlled lots to align with current absorption rates.The company's self-development land strategy remains a core structural advantage, with finished lot costs averaging approximately $70,000, or 21% of the average selling price.LGI is maintaining a high-volume 'gross sale' strategy, intentionally writing more contracts to capture a larger pool of qualified buyers despite the higher resulting cancellat ...

Core Insights - Crocs (CROX) reported flattish revenues in its fourth quarter, with both revenue and earnings exceeding expectations due to improved inventory management, growth in direct-to-consumer (DTC) sales, and stabilization of margins [1] Financial Performance - The core Crocs brand demonstrated stability, particularly in markets outside the United States [1]

Core Insights - Taylor Morrison Home Corporation emphasizes its competitive advantage through a strong consumer focus, which has led to recognition as America's most trusted builder for eleven consecutive years and inclusion in Fortune's most admired companies list [1] - The company has effectively navigated a challenging market characterized by lower consumer confidence and increased competition by leveraging its diverse operating model and broad consumer reach [2] Financial Performance - In 2025, the company reported a net income of $783 million, or $7.77 per diluted share, with an adjusted net income of $830 million, or $8.24 per diluted share [23] - The fourth-quarter results included a net income of $174 million, or $1.76 per diluted share, and an adjusted net income of $188 million, or $1.91 per diluted share [23] - The company achieved a 13% return on equity and a 14% growth in book value per share, supported by $381 million in share repurchases [3] Sales and Orders - In the fourth quarter, net orders totaled 2,499 homes, down 5% year-over-year, with a monthly absorption pace of 2.4 homes per community [24] - The company delivered 12,997 homes in 2025, generating approximately $7.8 billion in home closings revenue, with an average closing price of $597,000 [26] - The sales mix included 31% entry-level, 49% move-up, and 20% resort lifestyle buyers, with strong sales in Florida, California, and Phoenix [7] Market Conditions and Strategy - The company anticipates a solid year in 2026, focusing on new community openings, with over 100 new outlets planned, including more than 20 Esplanade communities [9][10] - Inventory management remains a priority, with a 24% reduction in spec home inventory since 2025, although nearly 3,000 unsold homes remain [11] - The company is shifting focus away from non-core submarkets to concentrate on move-up and resort lifestyle segments, which are expected to yield higher returns [13][14] Operational Efficiency - The company has improved construction cycle times, allowing for greater production flexibility and the ability to start homes later in the year while still closing by year-end [10] - The SG&A ratio was 9.5% for the full year, reflecting a 40 basis-point improvement compared to 2024, driven by lower payroll-related costs and efficiencies from digital tools [30] Future Outlook - The company expects to deliver around 11,000 homes in 2026, with an average closing price projected between $580,000 and $590,000 [27] - Gross margins are expected to improve gradually throughout the year, driven by an increase in the share of to-be-built home deliveries [29] - The company maintains a strong liquidity position of approximately $1.8 billion, including $850 million in unrestricted cash [32]

Financial Data and Key Metrics Changes - Net sales for Q3 2026 were $20.7 million, down from $23.4 million in the prior year quarter, while net income increased to $1.5 million from $900,000 a year ago [3][7] - Gross margin decreased to 23.5% from 26.1% in the prior year quarter, primarily due to higher tariffs and one-time costs [4][7] - Marketing and administrative expenses rose by $600,000 to $5 million, with expenses as a percentage of net sales increasing to 24% from 18.8% [7][9] - Basic and diluted earnings per share were $0.14, up from $0.09 in the same quarter last year [8] Business Line Data and Key Metrics Changes - The softness in revenue was primarily attributed to the bedding category, where consumers are opting for lower-cost items like blankets instead of higher-priced bedding sets [14][15] - The company is excited about the relaunch of the Groovy Girls product line, which is expected to broaden its reach in the juvenile space [4] Market Data and Key Metrics Changes - The majority of products are produced in China, with almost all (high 90%) sourced from there, which poses risks due to ongoing trade tensions [16][31] - The company is exploring alternative sourcing options in countries like Cambodia, Pakistan, and India, but is cautious due to quality and safety concerns [31] Company Strategy and Development Direction - The company is focused on driving profitability through pricing and cost actions to offset the challenging sales environment [3] - A disciplined approach to capital allocation, including regular dividends and growth-oriented investments, is emphasized as a key pillar for enhancing shareholder value [6][10] - The company remains confident in the long-term fundamentals of the infant, toddler, and juvenile category [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the difficult macroeconomic backdrop, including elevated tariffs and uneven consumer spending, but expressed confidence in the company's strategy [10] - The company is committed to managing costs and maintaining a conservative inventory strategy to minimize exposure to excess inventory [5][9] Other Important Information - The company received $2.5 million in insurance proceeds related to claims made under a representation and warranties insurance policy, which positively impacted income before tax [8][18] - The company incurred $600,000 in severance expenses related to operational consolidation efforts during the quarter [5][7] Q&A Session Summary Question: Where was the softness on the revenue line? - The softness was primarily in the bedding category, with consumers opting for lower-cost alternatives [14][15] Question: What percentage of the product comes from China? - Almost all products, in the high 90%, are sourced from China [16] Question: Can you provide details on the $2.5 million insurance claims benefit? - The claims were related to a product category dropped at retail shortly after acquisition, leading to a successful claim under the insurance policy [18][19] Question: How much did pricing contribute to quarterly revenue? - Price increases were implemented across retailers by October, impacting the sales mix during the quarter [26] Question: What is the contingency plan if tariffs increase again? - The company is exploring alternative sourcing options but is cautious due to quality and safety standards [31] Question: Will Groovy Girls be sold internationally? - Yes, the product will be sold internationally through distributors [42] Question: How is the Disney license in Canada performing? - The Disney license started in January, and the company is in the process of introducing its products to larger retailers [44] Question: What is the status of international distributors? - The company has over 30 distributors in more than 50 countries and is focused on expanding this network [47] Question: What is the company's approach to advertising? - The company is increasing its marketing budget and focusing on digital platforms like Facebook and Instagram to reach consumers [49]

Core Insights - The company is focused on stabilizing its business by restoring dealer confidence and aligning wholesale activity with retail demand, aiming for sustainable growth in the future [1][3] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs, with a commitment to these goals remaining unchanged [1][5] - The company is optimistic about early signs of improvement, particularly in North American retail sales, which have shown growth [2][11] Inventory Management - The company has taken intentional actions to address elevated dealer inventory, particularly in North America, resulting in a 16% decline in dealer inventory relative to year-end 2024 levels [11][33] - Global dealer inventory was down 17% over the same period, exceeding the target of a 10% reduction, indicating solid progress [11][33] - The focus on inventory discipline is central to the company's strategy, with targeted promotional support for touring models and disciplined quarterly planning [10][12] Financial Performance - In Q4 2025, consolidated revenue decreased by 28%, driven by a 10% decline in HDMC revenue and a 59% drop in HDFS revenue [26][28] - The operating loss for Q4 was $361 million, compared to a loss of $193 million in 2024, with significant losses attributed to both HDMC and HDFS [26][27] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, with earnings per share dropping from $3.44 to $2.78 [28][29] Retail Sales Performance - North American retail sales of new motorcycles increased by 5% in Q4, while international sales decreased by 10%, leading to a global retail sales decline of 1% [28][30] - The company experienced strength in lower-priced sport motorcycle models, which were up 33%, while the Grand American touring product saw a 6% increase [30][32] - EMEA retail sales declined by 24% in Q4, reflecting ongoing macroeconomic challenges, while Asia Pacific retail sales were down 1% [30][31] Strategic Initiatives - The company is committed to restoring relationships with dealers, improving inventory management, and enhancing customer focus through a refined product portfolio [5][6] - A new e-commerce strategy is being implemented to drive dealership traffic and support motorcycle sales, addressing previous issues of customer confusion and excessive discounting [8][9] - The company plans to announce a new strategic plan in May, which is expected to outline further initiatives for growth and stability [3][24] Future Outlook - The company anticipates 2026 to be a transition year, with expectations for improved dealer health and a return to long-term earnings power [12][53] - Projected retail units for 2026 are between 130,000 to 135,000, with a similar expectation for wholesale units, indicating a balanced approach to inventory management [54][55] - The company expects to face increased costs from tariffs in 2026, forecasting between $75 million to $105 million based on current levels [55][56]

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 was down 28%, with HDMC revenue down 10% and HDFS revenue down 59% [23] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [23] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, with earnings per share at $2.78, down from $3.44 in 2024 [25][44] Business Line Data and Key Metrics Changes - HDMC retail sales in Q4 increased by 5% in North America but decreased by 10% internationally, leading to a global retail sales decline of 1% [25] - For the full year 2025, North American retail sales were down 13%, while EMEA retail sales were down 11% [26][28] - HDMC revenue for the full year decreased by 13% to $3.6 billion, driven by a 16% decrease in wholesale volumes [32] Market Data and Key Metrics Changes - North American dealer inventory declined by 16% year-over-year, while global dealer inventory was down 17%, exceeding the 10% reduction target [10][30] - In Latin America, Q4 retail sales increased by 10%, with both Brazil and Mexico showing growth [29] - Asia Pacific retail sales were down 15% for the full year, with significant weakness in China [28] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [5] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [6] - A strategic plan announcement is expected in May 2026, aiming for sustainable growth [4][21] Management's Comments on Operating Environment and Future Outlook - Management views 2026 as a transition year to reset the business and finalize the new strategy, with expectations of operating margin pressure due to lower production runs [11][48] - The company anticipates a cost of $75 million to $105 million in new or increased tariffs for 2026, compared to $67 million in 2025 [48] - Management is optimistic about the brand's potential and is committed to rebuilding trust and long-term earnings power [21] Other Important Information - The HDFS transaction is expected to transform the financial services model into a capital-light, de-risked business [22] - The company plans to conduct a rigorous review of its cost base and operating expenses, targeting at least $150 million in annual run rate savings starting in 2027 [18][73] - LiveWire is focusing on launching new products and expanding its network while managing costs [42] Q&A Session Summary Question: HDFS operating income expectations - Analyst inquired about the HDFS operating income expectations, which were lower than initially anticipated, and sought clarification on the long-term profitability of the business [52] - Management explained that HDFS is expected to stabilize and potentially triple its income over the next few years, but current volume levels are lower than expected [53][55] Question: Wholesale guidance and inventory levels - Analyst asked about the cadence of wholesale shipments and inventory levels for 2026 [58] - Management indicated that Q1 2026 wholesale shipments would be lower than the previous year, with an expected increase in Q2, while emphasizing the importance of healthy inventory levels [59][63] Question: Retail expectations and LiveWire investment - Analyst questioned the expectations for global retail sales and the willingness to invest in LiveWire despite potential losses [64] - Management expressed optimism about new product launches and the potential for retail sales growth, while confirming continued investment in LiveWire [66][70]

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 was down 28%, with HDMC revenue down 10% and HDFS revenue down 59% [25] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [25] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, and earnings per share was $2.78, down from $3.44 in 2024 [27] Business Line Data and Key Metrics Changes - HDMC retail sales in Q4 increased by 5% in North America, while international retail sales decreased by 10%, leading to a global retail sales decline of 1% [27] - For the full year 2025, North American retail sales were down 13%, while EMEA retail sales were down 11% [28][29] - HDFS revenue for Q4 was $106 million, down from $257 million in the prior year, primarily due to lower retail and wholesale finance receivables [39] Market Data and Key Metrics Changes - North American dealer inventory declined by 16% relative to year-end 2024 levels, while global dealer inventory was down 17%, exceeding the 10% reduction target [11][31] - In Latin America, Q4 retail sales increased by 10%, with both Brazil and Mexico showing growth [30] - Asia Pacific retail sales declined by 1% in Q4, with significant weakness in China [29] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [6][12] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [7] - A strategic plan is expected to be announced in May 2026, with a focus on sustainable growth and optimizing inventory management [4][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year, with macro-driven pressures and internal challenges [4] - The company expects margins to be under pressure in the near term due to production levels running below wholesale [13] - 2026 is viewed as a transition year to reset the business and finalize the new strategy, with expectations for improved dealer health and financial results [12][16] Other Important Information - The HDFS transaction is expected to transform the business into a capital-light model, with a significant reduction in debt and improved financial flexibility [24][38] - The company plans to conduct a rigorous review of its cost base and operating expenses, targeting at least $150 million in annual run rate savings starting in 2027 [20][21] Q&A Session Questions and Answers Question: Inquiry about HDFS operating income expectations - Management indicated that HDFS operating income is expected to be between $45 million and $60 million for 2026, with a long-term view of tripling that income over the next few years [55][56] Question: Wholesale guidance and inventory levels - Management noted that Q1 2026 wholesale shipments are expected to be down slightly compared to the previous year, with a gradual increase anticipated in Q2 [60][62] Question: Retail sales expectations and LiveWire investment - Management expressed optimism about retail sales growth in 2026, driven by new model introductions and a focus on supporting dealers [70][72]

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 decreased by 28%, with HDMC revenue down 10% and HDFS revenue down 59% [25] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [26] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, and operating income was $387 million, down from $417 million in 2024 [27] Business Line Data and Key Metrics Changes - HDMC retail performance saw North American retail sales of new motorcycles up 5% in Q4, while international retail sales were down 10% [27] - For the full year 2025, global retail sales of new motorcycles were down 12%, with North America and international markets performing similarly [30] - HDFS revenue for Q4 was $106 million, down from $257 million in the prior year, primarily due to lower retail and wholesale finance receivables [38] Market Data and Key Metrics Changes - North American retail sales for Q4 were up 5%, while EMEA retail sales declined by 24% due to macroeconomic conditions [28][29] - In Asia-Pacific, Q4 retail sales declined by 1%, with significant weakness in China [29] - Latin American retail sales increased by 10% in Q4, with both Brazil and Mexico showing growth [30] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [6] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [7] - A strategic plan is expected to be announced in May 2026, with a focus on sustainable growth and optimizing inventory management [4][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year, with macro-driven pressures and internal challenges [4] - The company expects 2026 to be a transition year as it resets the business and finalizes its new strategy [12] - Margins are expected to be under pressure in the near term due to production runs being below wholesale [13] Other Important Information - Dealer inventory at the end of Q4 was down 17% compared to the previous year, exceeding the target reduction of 10% [30] - The HDFS transaction is expected to transform the business into a capital-light, de-risked model, with a significant reduction in debt [25][37] - The company plans to conduct a rigorous review of its cost base and operating expenses to align with current demand levels [20] Q&A Session Summary Question: Inquiry about HDFS operating income expectations - Management indicated that HDFS operating income for 2026 is expected to be between $45 million and $60 million, with long-term profitability projected to be significantly higher [51][52] Question: Wholesale guidance and inventory levels - Management noted that Q1 2026 wholesale shipments are expected to be down slightly compared to the previous year, with a gradual increase anticipated in Q2 [57][60] Question: Expectations for global retail sales - Management expressed optimism about U.S. retail sales, particularly with the introduction of new models, while being cautious about overall retail performance [64][66]

Financial Data and Key Metrics Changes - Consolidated revenue in Q4 2025 decreased by 28%, with HDMC revenue down 10% and HDFS revenue down 59% [25] - Consolidated operating income for Q4 was a loss of $361 million, compared to a loss of $193 million in Q4 2024 [26] - For the full year 2025, consolidated revenue was $4.5 billion, a 14% decrease compared to the previous year, and operating income was $387 million, down from $417 million in 2024 [27] Business Line Data and Key Metrics Changes - HDMC retail performance saw North American sales of new motorcycles increase by 5% in Q4, while international sales decreased by 10%, leading to a global retail sales decline of 1% [27][28] - HDFS revenue for Q4 was $106 million, down from $257 million in the prior year, primarily due to lower retail and wholesale finance receivables [38] - LiveWire's consolidated revenue increased by 9% in Q4, driven by a 61% increase in electric motorcycle units [42] Market Data and Key Metrics Changes - North American retail sales for the full year 2025 were down 13%, while EMEA retail sales declined by 11% [28][30] - In Latin America, Q4 retail sales increased by 10%, with both Brazil and Mexico showing growth [30] - Asia-Pacific retail sales were down 15% for the full year, with significant weakness in China [29] Company Strategy and Development Direction - The company is focused on stabilizing the business by restoring dealer confidence and aligning wholesale activity with retail demand [6][12] - Immediate priorities include improving dealer profitability, reigniting brand momentum, and reducing costs [7] - A strategic plan is expected to be announced in May 2026, aiming for sustainable growth and improved dealer relationships [4][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2025 was a challenging year, with macro-driven pressures and internal challenges [4] - The company expects 2026 to be a transition year as it resets the business and finalizes its new strategy [12] - Margins are anticipated to be under pressure in the near term due to production runs being below wholesale [13] Other Important Information - Dealer inventory at the end of Q4 was down 17% compared to the previous year, exceeding the target reduction of 10% [30] - The company is conducting a thorough review of its cost base and operating expenses to align with current demand [20] - A dividend of $1 billion was facilitated from HDFS to HDI in Q4, with further dividends expected [45] Q&A Session Summary Question: Inquiry about HDFS operating income expectations - Management indicated that HDFS operating income for 2026 is expected to be between $45 million and $60 million, with a long-term view of potentially tripling that figure [53][54] Question: Wholesale guidance and inventory levels - Management noted that Q1 2026 wholesale shipments are expected to be down slightly, with a potential increase in Q2 as dealers are positioned for the season [60][63] Question: Retail sales expectations and LiveWire investment - Management expressed optimism about retail sales growth in 2026, particularly with new model introductions, while also confirming continued investment in LiveWire despite potential losses [66][68]