Q - INTERPARFUMS

Previous wording

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 72% and 70% ofnet sales for thethree months ended March 31, 2025 and 2024, respectively. We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, Rochas and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world. Our exclusive and worldwide license for the production and distribution of Lacoste brand perfumes and cosmetics became effective in January 2024.

Current wording

We produce and distribute fragrance products through our European based operations primarily under license agreements with brand owners, and European based fragrance product sales represented approximately 72% and 68% ofnet sales for thesix months ended June 30, 2025 and 2024, respectively. We have built a portfolio of prestige brands, which include Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Kate Spade, Lacoste, Lanvin, Moncler, Montblanc, Rochas and Van Cleef & Arpels, whose products are distributed in over 120 countries around the world.

Previous wording

Through our United States based operations, we also produce and distribute fragrance and fragrance related products. United States based operations represented 28% and 30% of net sales for thethree months ended March 31, 2025 and 2024, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, Emanuel Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta and Roberto Cavalli brands.

Current wording

Through our United States based operations, we also produce and distribute fragrance and fragrance related products. United States based operations represented 28% and 32% of net sales for thesix months ended June 30, 2025 and 2024, respectively. These fragrance products are sold primarily pursuant to license or other agreements with the owners of the Abercrombie & Fitch, Anna Sui, Donna Karan/DKNY, Emanuel Ungaro, Ferragamo, Graff, GUESS, Hollister, MCM, Oscar de la Renta and Roberto Cavalli brands.

Previous wording

As a percentage of net sales, product sales for the Company’s largest brands represented 76% and 74%, respectively, with a split by brand as follows:

Current wording

As a percentage of net sales, product sales for the Company’s largest brands represented 77% and 74%, respectively, with a split by brand as follows:

Previous wording

Our reported net sales are impacted by changes in foreign currency exchange rates as approximately than 50% of net sales of our European based operations are denominated in U.S. dollars, while almost all costs of our European based operations are incurred in euro. We address certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments and primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates.

Current wording

Our reported net sales are impacted by changes in foreign currency exchange rates as approximately 50% of net sales of our European based operations are denominated in U.S. dollars, while almost all costs of our European based operations are incurred in euro. We address certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments and primarily enter into foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates.

Previous wording

Three Months Ended March 31, 2025 as Compared to the Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025 as Compared to the Three and Six Months Ended June 30, 2024

Previous wording

For European based operations, sales increased 7% compared to the corresponding period of the prior year, driven by Jimmy Choo, Coach, and Lacoste, which grew by 36%, 11%, and 30%, respectively, respectively, compared to the corresponding period of the prior year. These increases were driven by continued strong performance for the I Want Choo and Jimmy Choo Man franchises, the introduction of Coach Man Extreme, and strong demand for Lacoste as the brand entered its second year under our management. Sales of Montblanc declined by 16%, which was driven by the substantial increase in sales in the first quarter of 2024 following the debut of Legend Blue. Sales are expected to increase through the balance of 2025 with the introduction of Montblanc Explorer Extreme later this year.

Current wording

For European based operations, sales in the three months ended June 30, 2025 increased 6% on a reported basis and 4% on an organic basis, compared to the corresponding period of the prior year, driven by Lacoste and Coach, which grew by 59% and 42%, respectively. These increases were driven by continued strong performance in these brand's established lines, plus the successful launches of Coach for Men Eau de Parfum and Coach Women Gold. Jimmy Choo fragrance sales declined 20% compared to a high base in the corresponding period of the prior year. However, brand sales increased 5% for the six months ended June 30, 2025 compared to the corresponding period of the prior year due to the introduction of Jimmy Choo Man Extreme in the first quarter and the continued popularity of the I Want Choo fragrance family. Sales of Montblanc were broadly flat in the second quarter, but are expected to increase through the balance of 2025 with the recent launch of Explorer Extreme. For the six months ended June 30, 2025, European based operations sales increased 7% on a reported basis and 6% on an organic basis, compared to the corresponding period of the prior year.

Previous wording

Thefirst quarter growth was ahead of expectations, and we are confident in our future as we look forward to executing our plans for the remainder of 2025. A new blockbuster for Ferragamo, Fiamma, debuted at the end of March 2025 and a new blockbuster, Roberto Cavalli Serpentine, will launch in the second quarter. We have a large number of brand extensions across many of our brands launching throughout the year, including a new flankers for Coach Woman, Lacoste L.12.12 and Original in the second quarter and a new flanker for I Want Choo in the second half of 2025. Additionally, extensions are set to debut for Donna Karan Cashmere Collection, GUESS Bella Vita, and DKNY 24/7. While the pace of growth in the fragrance market is starting to slow down, the power of our diverse brand portfolio, in combination with our agile operating model, should help us gain market share.

Current wording

While thesecond quarter saw a slight overall decline, we are confident in our future as we look forward to executing our plans for the remainder of 2025. A new blockbuster, Roberto Cavalli Serpentine, began limited distribution in the second quarter and will expand throughout the remainder of the year. We have a large number of brand extensions across many of our brands launching throughout the year, including a new flanker for Lacoste Original and a new flanker for I Want Choo in the second half of 2025. Additionally, extensions are set to debut for Donna Karan Cashmere Collection, GUESS Bella Vita, and DKNY 24/7. While the pace of growth in the fragrance market is starting to slow down, the power of our diverse brand portfolio, in combination with our agile operating model, should help us gain market share.

Previous wording

In thethree months ended March 31, 2025, net sales in our largest market, North America, rose 14% as compared to the prior year period, followed by an increase in the Western Europe of 1%. Our sales in Asia/Pacific decreased slightly by 3% driven by a higher base from 2024 in Australia. Our net sales in Eastern Europe were also robust, up 46% in thethree months ended March 31, 2025 as compared to the prior year period where we faced temporary sourcing constraints. Central and South America net sales declined 10%, also off a high base in 2024 when the region grew 31%. Middle East and Africa net sales declined 16% due to macroeconomic challenges and a disproportionate impact from the exit of the Dunhill license due to its significant presence there.

Current wording

In thesix months ended June 30, 2025, net sales in our largest market, North America, rose 7% as compared to the prior year period, followed by an increase in Western Europe of 3%. Our sales in Asia/Pacific decreased by 12% driven by a higher base from 2024 in Australia and distribution disruptions in South Korea in the current year while the overall trend remains positive in China and Japan. Our net sales in Eastern Europe were also robust, up 14% in thesix months ended June 30, 2025 as compared to the prior year period when we faced temporary sourcing constraints. Central and South America net sales increased 7%. Middle East and Africa net sales declined 19% primarily due to a disproportionate impact from the exit of the Dunhill license due to its significant presence. Excluding the impact of Dunhill, Middle East and Africa net sales declined 6% due to the impacts of the conflicts in the region and a reduction in the number of doors in many markets that are now more focused on higher-end luxury fragrances.

Previous wording

The Company’s gross profit margin as a percentage of net sales was 63.7%for thethree months ended March 31, 2025 as compared to 62.5% for the corresponding period of the prior year. The increase in thethree months ended March 31, 2025 as compared to the prior year period was driven by favorable segment mix in the current year.

Current wording

The Company’s gross profit margin as a percentage of net sales was 66.2%and 65.0%for thethree and six months ended June 30, 2025 as compared to 64.5%and 63.5%for the corresponding period of the prior year. The increase in the three and six months ended June 30, 2025 as compared to the prior year period was driven by favorable segment and brand mix in the current year.

Previous wording

For European based operations, gross profit margin as a percentage of net sales was 65.5% for thethree months ended March 31, 2025, respectively, as compared to 64.0% for the corresponding period of the prior year. European based operations were positively impacted by brand and channel mix during thethree months ended March 31, 2025 as compared to the prior year period.

Current wording

For European based operations, gross profit margin as a percentage of net sales was 68.3% and 66.9%for thethree and six months ended June 30, 2025, respectively, as compared to 68.8%and 66.3%for the corresponding period of the prior year. European based operations were negatively impacted by brand and channel mix during thethree months ended June 30, 2025 as compared to the prior year period, while brand and channel mix were favorable overall in the first half of 2025.

Previous wording

Generally, we do not bill customers for shipping and handling costs, which are included in selling, general and administrative expenses in the consolidated statements of income. As such, our Company’s gross profit may not be comparable to other companies, which may include these expenses as a component of cost of sales.

Current wording

Generally, we do not bill customers for shipping and handling costs, which are included in selling, general and administrative expenses in the consolidated statements of income. As such, our Company’s gross profit may not be comparable to other companies, which may include these expenses as a component of cost of goods sold.

Previous wording

Promotion and advertising included in selling, general and administrative expenses aggregated $51.5 million for thethree months ended March 31, 2025, as compared to $48.3 million for the corresponding period of the prior year and represented 15.2% of net salesfor thethree months ended March 31, 2025, as compared to 14.9% for the corresponding period of the prior year. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness. We believe that our promotion and advertising efforts have a beneficial effect on sales. As such, the Company is focused on increasing promotional and advertising spending to support the continued success of our brands. Additionally, we continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience. Long term, we continue to anticipate that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales.

Current wording

Promotionand advertising included in selling, general and administrative expenses aggregated $68.8 million and $120.4 million for the three and six months ended June 30, 2025, respectively, as compared to $66.4 million and $114.7 million for the corresponding periods of the prior year and represented 20.6% and 17.9% of net sales for the three and six months ended June 30, 2025, respectively, as compared to 19.4% and 17.2% for the corresponding periods of the prior year. Promotion and advertising are integral parts of our industry, and we continue to invest heavily to support new product launches and to build brand awareness. We believe that our promotion and advertising efforts have a beneficial effect on sales. As such, the Company is focused on increasing promotional and advertising spending to support the continued success of our brands. Additionally, we continue to develop and implement omnichannel concepts and compelling content to deliver an integrated consumer experience. Long term, we continue to anticipate that on a full year basis, promotion and advertising expenditures will aggregate approximately 21% of net sales.

Previous wording

Royalty expense included in selling, general and administrative expenses aggregated $28.1 million for thethree months ended March 31, 2025, respectively, as compared to $27.2 million for the corresponding periods of the prior year. Royalty expense represented 8.3% of net sales for thethree months ended March 31, 2025 as compared to 8.4% of net sales for the corresponding periods of the prior year. This slight decrease was primarily driven by favorable brand mix.

Current wording

Royalty expense included inselling, general and administrative expenses aggregated $27.7 million and $55.8 million for thethree and six months ended June 30, 2025, respectively, as compared to $27.0 million and $54.2 million for the corresponding periods of the prior year. Royalty expense represented 8.3%of net sales for both thethree and six months ended June 30, 2025 as compared to 7.9% and 8.1% of net sales for the corresponding periods of the prior year. This increase was primarily driven by unfavorable brand mix.

Previous wording

As a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our operating margins aggregated 22.2% for thethree months ended March 31, 2025, respectively, as compared to 21.0% for the corresponding period of the prior year.

Current wording

As a result of the above analysis regarding net sales, gross profit margins and selling, general and administrative expenses, our operating margins aggregated 17.7% and 20.0% for thethree and six months ended June 30, 2025, respectively, as compared to 18.9% and 19.9% for the corresponding period of the prior year.

Previous wording

Overall, other income and expense for thethree months ended March 31, 2025, was a loss of $1.7 million as compared to a gain of $2.1 million in the corresponding prior year period. The main drivers of this change are discussed in more detail below. One of the main drivers is the impact of our gains and losses on foreign currency where we recognized a loss of $0.8 million in the first quarter of 2025, and a gain of $0.9 million in the first quarter of 2024. Another driver of this change is the impact of our unrealized gains and losses on marketable securities where we had recordedan unrealized loss of $0.7 million in the first quarter of 2025 andan unrealized gain of $1.4 million in the first quarter of 2024. Changes in interest expense and interest income were relatively flat year-over-year.

Current wording

Overall, other income and expense for thesix months ended June 30, 2025, was a loss of $6.7 million as compared to a loss of $1.5 million in the corresponding prior year period. The main drivers of this change are discussed in more detail below. One of the main drivers is the impact of our gains and losses on foreign currency where we recognized a loss of $2.4 million in the first half of 2025 compared to a gain of $0.3 million in the first half of 2024. Another driver of this change is the impact of our gains and losses on marketable securities where we had recorded a loss of $3.4 million in the first half of 2025 anda loss of $0.6 million in the first halfof 2024. Changes in interest expense and interest income were favorable year-over-year with net interest expense of $1.1 million during the six months ended June 30, 2025 as compared to a net interest expense of $0.8 million in the prior year period.

Previous wording

Interest expense is primarily related to the financing of brand and licensing acquisitions as well as our headquarters in Paris. Long-term debt including current maturities aggregated $150.8 million and $157.3 million as of March 31, 2025 and December 31, 2024, respectively. Interest expense was $1.5 million in the three months ended March 31, 2025 compared to $1.8 million in the prior year period.

Current wording

Interest expense is primarily related to the financing of brand and licensing acquisitions as well as our headquarters in Paris. Long-term debt including current maturities aggregated $210.0 million and $157.3 million as of June 30, 2025 and December 31, 2024, respectively. Interest expense was $3.1 million in thesix months ended June 30, 2025 compared to $3.5 million in the prior year period.

Previous wording

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Approximately 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in thethree months ended March 31, 2025 and 2024.

Current wording

We enter into foreign currency forward exchange contracts to manage exposure related to receivables from unaffiliated third parties denominated in a foreign currency and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. Approximately 50% of net sales of our European based operations are denominated in U.S. dollars. Gains and losses in derivatives designated as hedges are accumulated in other comprehensive income and gains and losses in derivatives not designated as hedges are included in (gain) loss on foreign currency on the accompanying consolidated income statements. Such gains and losses were immaterial in thethree and six months ended June 30, 2025 and 2024.

Previous wording

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments and realized and unrealized gains and losses on marketable equity securities. Interest income was $1.3 million in thethree months ended March 31, 2025 compared to $1.6 million in the prior year period. As of March 31, 2025, short-term investments also include approximately $7.3 million of marketable equity securities of other companies in the luxury goods sector. In the first quarter of 2025, the Company had unrealized losses on these securities $0.7 million on these securities compared to unrealized gains of $1.4 million for the three months ended March 31, 2024.

Current wording

Interest and investment income represents interest earned on cash and cash equivalents and short-term investments and realized and unrealized gains and losses on marketable equity securities. Interest income was $2.6 million in thesix months ended June 30, 2025 compared to $1.7 million in the prior year period. As of June 30, 2025, short-term investments also include approximately $3.5 million of marketable equity securities of other companies in the luxury goods sector. In thesecond quarter of 2025, the Company had unrealized losses on these securities $1.1 million compared to unrealized gains of $1.5 million for the corresponding period of the prior year.

Previous wording

Our consolidated effective tax rate was 24.5% and 23.9% for thethree months ended March 31, 2025 and 2024, respectively. The effective tax rate for European based operations was 25.5% and 25.0% for thethree months ended March 31, 2025 and 2024, respectively, while the effective tax rate for United States based operations was 18.1% for thethree months ended March 31, 2025, as compared to 17.7% for the corresponding period of the prior year. Our effective tax rate for United States based operations differs from the 21% statutory rate in the United States as it is a blended rate across multiple jurisdictions, and takes into account benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income, slightly offset by state and local taxes. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where we operate.

Current wording

Our consolidated effective tax rate was 24.3% and 23.9% for thesix months ended June 30, 2025 and 2024, respectively. The effective tax rate for European based operations was 25.4% and 25.0% for thesix months ended June 30, 2025 and 2024, respectively, while the effective tax rate for United States based operations was 18.8% for thesix months ended June 30, 2025, as compared to 19.9% for the corresponding period of the prior year. Our effective tax rate for United States based operations differs from the 21% statutory rate in the United States as it is a blended rate across multiple jurisdictions, and takes into account benefits received from the exercise of stock options as well as deductions we are allowed for a portion of our foreign derived intangible income, slightly offset by state and local taxes. Other than as discussed above, we did not experience any significant changes in tax rates, and none were expected in jurisdictions where we operate.

Previous wording

Net income attributable to Interparfums, Inc. was $42.5 million for thethree months ended March 31, 2025 as compared to $41.0 million for the corresponding period of the prior year.

Current wording

Net income attributable to Interparfums, Inc. was $32.0 million and $74.5 million for thethree and six months ended June 30, 2025, respectively, as compared to $36.8 millionand $77.9 million for the corresponding period of the prior year.

Previous wording

Net income attributable to European based operations was $48.1 million for thethree months ended March 31, 2025, as compared to $44.9 million for the corresponding periods of the prior year, while net income attributable to United States based operations was $8.7 million for thethree months ended March 31, 2025, as compared to $9.5 million for the corresponding periods of the prior year. The significant fluctuations in net income for both European based operations and United States based operations are directly related to the previous discussions pertaining to changes in sales, gross margin, and selling, general and administrative expenses.

Current wording

Net income attributable to European based operations was $32.7 million and $80.9 million for thethree and six months ended June 30, 2025, as compared to $33.2 millionand $78.1 million for the corresponding periods of the prior year, while net income attributable to United States based operations was $9.6 million and $18.2 million thethree and six months ended June 30, 2025, as compared to $15.2 millionand $24.8 million the corresponding periods of the prior year. The significant fluctuations in net income for both European based operations and United States based operations are directly related to the previous discussions pertaining to changes in sales, gross margin, and selling, general and administrative expenses.

Previous wording

The noncontrolling interest arises from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European based operations and aggregated 28% of European based operations net income for both thethree months ended March 31, 2025 and 2024. Net profit margins attributable to Interparfums, Inc. for thethree months ended March 31, 2025 and 2024 aggregated 12.5% and 12.7%, respectively.

Current wording

The noncontrolling interest arises from our 72% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 28% of Interparfums SA shares trade on the Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European based operations and aggregated 28% of European based operations net income for both thesix months ended June 30, 2025 and 2024. Net profit margins attributable to Interparfums, Inc. for thesix months ended June 30, 2025 and 2024 aggregated 11.1% and 11.7%, respectively.

Previous wording

Our conservative financial tradition has enabled us to amass significant cash balances. As of March 31, 2025, we had $171.9 million in cash, cash equivalents and short-term investments, most of which are held in euro by our European based operations and is readily convertible into U.S. dollars. We have not had any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term investments.

Current wording

Our conservative financial tradition has enabled us to amass significant cash balances. As of June 30, 2025, we had $205.4 million in cash, cash equivalents and short-term investments, the majority of which are held in euro by our European based operations and is readily convertible into U.S. dollars. We have not experienced any liquidity issues to date, and do not expect any liquidity issues relating to such cash and cash equivalents and short-term investments.

Previous wording

As of March 31, 2025, working capital aggregated $604.6 million. Approximately 78% of the Company’s total assets are held by European based operations, and approximately $277.0 million of trademarks, licenses and other intangible assets are also held by European based operations.

Current wording

As of June 30, 2025, working capital aggregated $654.0 million. Approximately 74% of the Company’s total assets are held by European based operations, and approximately $298.3 million of trademarks, licenses and other intangible assets are also held by European based operations.

Previous wording

The Company hopes to continue to benefit from its strong financial position to potentially acquireone or more brands, either on a proprietary basis or as a licensee. In March 2025, our 72% owned French subsidiary, Interparfums SA, acquired all intellectual property rights relating to Maison Goutal held by Amorepacific Europe. Amorepacific Europe will continue to operate the Goutal Brand under an existing license agreement that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brand. Additionally in March 2025, we renewed the Coach license agreement for an additional five-year term, extending the license through June 30, 2031.

Current wording

The Company hopes to continue to benefit from its strong financial position to potentially acquireone or more brands, either on a proprietary basis or as a licensee. In July 2025, our 72% owned French subsidiary, Interparfums SA, signed an exclusive fragrance license agreement with Longchamp running through December 31, 2036. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. The first launch is expected in 2027. In June 2025, our 72% owned French subsidiary, Interparfums SA, acquired all intellectual property rights relating to Maison Goutal held by Amorepacific Europe. Amorepacific Europe will continue to operate the Goutal brand under an existing license agreement that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brand. Additionally, in June 2025, we renewed the Coach license agreement for an additional five-year term, extending the license through June 30, 2031.

Previous wording

In December 2024, our 72% owned French subsidiary, Interparfums SA, obtained all Off-White brand names and registered trademarks for Class 3 fragrance and cosmetics products, subject to an existing license that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brands. Additionally, in December 2024, we renewed the Van Cleef & Arpels license agreement for an additional nine-year term, beginning January 1, 2025. In July 2023, we entered into a global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Roberto Cavalli brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect in July 2023, and we began shipping products in February 2024.

Current wording

In December 2024, our 72% owned French subsidiary, Interparfums SA, obtained all Off-White brand names and registered trademarks for Class 3 fragrance and cosmetics products, subject to an existing license that expires on December 31, 2025, when Interparfums SA will begin commercial use of the fragrance brands. Furthermore, in December 2024, we renewed the Van Cleef & Arpels license agreement for an additional nine-year term, beginning January 1, 2025. In July 2023, we entered into a global licensing agreement for the creation, development and distribution of fragrances and fragrance related products under the Roberto Cavalli brand. Our rights under this license are subject to certain minimum advertising expenditures and royalty payments as are customary in our industry. This license took effect in July 2023, and we began shipping products in February 2024.

Previous wording

Cash used in operating activities aggregated $7.4 million for thethree months ended March 31, 2025 and compared to $52.0 million for thethree months ended March 31, 2024. For thethree months ended March 31, 2025, working capital items used $72.5 million in cash from operating activities, as compared to $111.7 million in the 2024 period. Although from a cash flow perspective accounts receivables are up 8% from year end 2024, the balance is reasonable based onfirst quarter 2025 record sales levels and seasonality of the business. Day’s sales outstanding remained consistent at 74 days, up slightly from 73 days in the corresponding period of the prior year driven by changes in our channel mix, we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels as of March 31, 2025 increased 3% from year end 2024 in support of our overall sales growth. Additionally, as we are working to manage down our inventory levels, we have seen increased conversion of raw materials into finished goods resulting in finished goods making up 63% of our inventory levels at March 31, 2025 as compared to 55% at March 31, 2024. Due to past supply constraints, we had strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold. These constraints have largely abated and we are gradually reversing some of these previous interventions. We are beginning to see the impacts of these recent inventory management efforts and will continue to work to optimize inventory levels.

Current wording

Cash provided by operating activities aggregated $4.5 million for thesix months ended June 30, 2025 compared to cash used in operating activities of $26.5 million for thesix months ended June 30, 2024. For thesix months ended June 30, 2025, working capital items used $108.9 million in cash from operating activities, as compared to $140.2 million in the 2024 period. From a cash flow perspective, accounts receivables are down 1% from year end 2024. The balance is reasonable based onsecond quarter 2025 sales levels and seasonality of the business. Day’s sales outstanding remained consistent at 74 days, up slightly from 72 days in the corresponding period of the prior year driven by changes in our channel mix, as we are still seeing strong collection activity and do not anticipate any issues with collections of accounts receivable. From a cash flow perspective, inventory levels as of June 30, 2025 increased 5% from year end 2024 as is customary as we prepare for second half sales and holiday season orders. As compared to June 30, 2024, our inventory levels have decreased as we continue to work to manage down our inventory. We are doing this by increasing conversion of raw materials into finished goods resulting in finished goods making up 65.0% of our inventory levels at June 30, 2025 as compared to 59.7% at June 30, 2024. Due to past supply constraints, we had strived to carry more inventory overall, source the same components from multiple suppliers and when possible, manufacture products closer to where they are sold. These constraints have largely abated and we are gradually reversing some of these previous interventions. We are beginning to see the impacts of these recent inventory management efforts and will continue to work to optimize inventory levels.

Previous wording

Cash flows provided by investing activities in 2025 reflect purchases and sales of short-term investments. These investments consist of certificates of deposit with maturities greater than three months, marketable equity securities and other contracts. At March 31, 2025, approximately $2.2 million of certificates of deposit contain penalties where we would forfeit a portion of the interest earned in the event of early withdrawal.

Current wording

Cash flows provided by investing activities in 2025 are comprised of the net effect of purchases and sales of short-term investments. These investments consist of certificates of deposit with maturities greater thansix months, marketable equity securities and other contracts. At June 30, 2025, approximately $2.3 million of certificates of deposit contain penalties where we would forfeit a portion of the interest earned in the event of early withdrawal.

Previous wording

These proceeds were offset by the payment for capital expenditures during the quarter. In March 2025, the Company paid approximately $19.7 million for the purchase of the Goutal Trademark.

Current wording

These proceeds were offset by the payment for capital expenditures during the quarter. In March 2025, the Company paid approximately $19.7 million for the purchase of the Goutal Trademark. Additionally, during the second quarter the Company purchased approximately $15.3 million of additional property in Paris attached to its French headquarters.

Previous wording

Our short-term financing requirements are expected to be met by available cash on hand at March 31, 2025, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2025 consist of a $70 million unsecured revolving line of credit provided by a consortium of domestic commercial banks and approximately $8.7 million(€8 million) in credit lines provided by a consortium of international financial institutions. There was $7.6 million of short-term borrowings outstanding pursuant to these facilities as of March 31, 2025 and $8.3 million outstanding as of March 31, 2024.

Current wording

Our short-term financing requirements are expected to be met by available cash on hand at June 30, 2025, and by short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2025 consist of $70 million unsecured revolving lines of credit provided by a consortium of domestic commercial banks and approximately $9.4 million(€8 million) in credit lines provided by a consortium of international financial institutions. There was $9.4 million of short-term borrowings outstanding pursuant to these facilities as of June 30, 2025 and $18.5 million outstanding as of June 30, 2024.

Previous wording

Inflation rates in the United States and foreign countries in which we operate did not have a significant impact on operating results for thethree months ended March 31, 2025

Current wording

Inflation rates in the United States and foreign countries in which we operate did not have a significant impact on operating results for thesix months ended June 30, 2025; however, we anticipate potential inflationary impacts in the second half of 2025 due to potential increased costs from tariffs.