Summer Infant (SUMR) 13 May 202020 Q1 Earnings call transcript

Good morning. And welcome to the Summer Infant Inc. Fiscal 2020 First Quarter Call. All participants will be in listen-only mode [Operator Instructions]. After today's presentation, there will be opportunity to ask questions. event recorded. this that note is being Please

I to and Mr. like to Moderator. conference over turn the Chris go would ahead. now Please Witty, Investor Relations

call. Brands' Hello, the is CEO, CFO, first the welcome and Interim on SUMR Noyes Francese. and quarter call to company's conference Paul With Stuart today me the XXXX

These to subject I would Please Report the XX-Q may a outlook our forward-looking various other factors that on Commission. risk statements and provide XXXX include cause from uncertainties quarterly December SUMR for Harbor that differ Annual Brands' for are Safe and events actual contained in now Exchange brief XX-K its like materially Form year-ended forward-looking the these refer to and and risks Securities on with results Form beyond. relate to Company's to call statement. statements filings XX, statements. to could in This the and XXXX, the reports

make help to in EBITDA, measures, operations. a are During Brands' the share. the earnings references metrics understanding of adjusted meaningful income gain call, believes adjusted company and non-GAAP which These financial SUMR per adjusted investors may changes management net

financial reconciliation see financial non-GAAP measures, on table for yesterday the evening. a issued release For information included in more of non-GAAP to results company's GAAP please measures the

And with Stuart. that, I'd like to turn to the call Stuart? over

of providing to go of continued overview rather the I'm results. appreciate and that our will quarter first a economic turbulent time its financial improve an today. recent COVID-XX, to bottom performance Brands which We start onset joining say morning, line you Chris, SUMR detail. in operating has everyone. pleased by good relentless our Thanks, and drive conference results call and developments, during through I’ll Paul the after

that we fortunate sure circumstances. operate have the Amazon our production. Lowe's the be many Depot, While Walmart, change or been our normal At Target open, investors taking stay most back most safeguard very while box seen such for leading our challenging has surging China time come customers as I'm of big through part appropriate sites demand. and near continued know have that to to it of have in retail our same levels employees, Home as chains precautions to all suppliers e-commerce continue of to the

for reported $XX.X We the mainly yet to million quarter, from situation. revenue $XX.X of last first million year down the COVID-XX due

many and As of retailers by impacted strollers, the review But across negatively as in Canada. here specialty areas, well a were the blankets, saw sales will Paul certain closure as play moment, in boosters Toys”R”Us further specialty we strength yards. such overall in as U.S.,

Our to available consumers some their often necessary products as in this for case has by staying current such of cases, the items elsewhere. essential, care remained quarter. or were now school, considered and a may with the require than at variety where being Moms and more products children young be home dads rather and in even kids

save warehouse, lease to same time, an The over retailers in period expense. the ahead initiatives, schedule to cost annualized Woonsocket sub-leased annual space product its performance an X Overall, year. we're given portion streamlining with the top-line including XXX,XXX savings adjusted million saving and more has for I'm company its abysmal providers. million of this our regard for additional annually recently recent a of from than what of with million many and X.X been California eliminate the X At pleased and over

use million in and facility of of greatly Brands to we'll trending optimistic at flow encouraging, of reduced products so. We our categories UK the year $X.X of closed aggressive now $X.X sales also to cash for posted such our first SUMR cash Due and indications in in by debt working quarter in March, I about same handled operations management we and we is do the the are cutting operations reminder, quarter tandem channels in thus and our far efforts from a the product across Point this period. our international expenses third-party the with improved the our As core end continue are how distribution million a a versus two. of am serve. during XXXX outlook capital, also positive China. we pleased remain

to year. on this have changed any profitability our not We thought process later

him trade year's here last Paul. going And all challenges, XXXX. the Brands. hairs more company the CFO him the his to certainly faced near turning onset I'd I'm along few Paul, added he unexpected many COVID-XX. has to end to we XXXX. service many wish and XXXX retire was over dedication escalation call that's for forward. sure of He SUMR then of like best to the the And thank month, Before recently, to of way with at He and the from the of decided at the and including years He a gray China has end the rejoined

Ed years. we in just considerable before financial to as financial Paul's profitability. in turnaround experience CFO by addition has path known be professional situations, and our Ed he was hire. the He'll XXXX, replaced Interim Schwartz, of may excellent Summer I've a that of an had be seasoned will recall some who He execute Infant for you many

you Lastly, normal to current to to restrictions This due I but mention September wanted the XXXX. primarily travel stockholders on hold company on X, his look this meeting distancing and year the forward is than to seeing later then. elected social annual we has

its pleased well this and holding alike the positioned and professionals unusual worldwide. the conditions I'm efforts through by government in this very battling company believe And to its medical difficult a Brands pandemic. of We to is is the SUMR face storm. applaud closing, way in we own say manage In that

proud for are our products, children the in midpoint people leaner much parents I'm such appreciate we with the the essential of company as challenging innovative ever, even outlook more our perhaps considered are and and the approach than times of We organization that for products as this. XXXX. now and

detail. Paul review financial our Paul? to I'll in results to that, turn it With over

Thanks, Stuart, and morning, good everyone.

a and XX-Q was press related last As release our issued night. reminder,

listening In filings. encourage you addition to our call, to review this to I conference

First the quarter fiscal $XX.X same quarter were net to million compared $XX.X of sales for XXXX. million

As double the channels, Stuart and Amazon. company our saw mentioned, boosters e-commerce blankets, growth product growth many as across specialty by such in including yards, strollers, driven categories, play digit

Canada negatively to were and COVID-XX certain softness markets, brick we sales retailers However, mortar lowest due with specialty including and some in impacted within restrictions.

percent was of percent sales, UK XX% XX.X% and in margin sales XXXX quarter was largely impact profit of to XXXX, was product digital reflected net a and The versus last XXXX. as of million advertising, to Gross lower this higher for XXXX expense freight as X.X% facility. sales fiscal in of versus Selling gross related cooperative and marketing percent first And $X.X mix as in a million year-over-year closure of due year. some The $XX.X in primarily XXXX year both was the of versus X.X% of sales a costs. quarters was including first XXXX. increase our costs the $XX.X the our closeout million margin and gross

lower XX% prior period. change by many costs million $X.X the percentage was company. in labor XXXX. General expenses sales reflects as and a the in due G&A administrative year in And $X.X were the The the XX.X% of to quarter year initiatives streamlining year-over-year and other versus million versus first this undertaken

our this mentioned, lease the more per portion to adjusted our Stuart will $X warehouse recently of million Woonsocket a As And save of footprint subleased we California an quarter, over $XXX,XXX save additional which annually. year.

share versus million track on approximately and first of other XXXX of net quarter year. $X $X.XX The Interest the loss initiatives compared period. million $X.X in expense loss a or we of $X.X $X.X All with first in savings per a the or reported was $X.XX the in anticipate of this are million year of last prior XXXX year. net million cost per savings company million quarter $X.X share

XXXX committed X.X% the Adjusted charges versus of add $X.X of the versus included was for EBITDA the million last first in as XXXX adjusted X.X% with back XXXX And $X.X million in net in a year. EBITDA sales compared million year was $X.X Adjusted quarter for period. of bank in prior quarter fiscal $X.X XXXX. EBITDA million first percent

Now turning balance sheet. to the

of cash and of March fiscal Infant at Summer approximately of XXXX, million million XXXX. had debt million the the bank XX, $XX.X and of $X.X million of cash $X.X As $XX.X compared with debt of beginning bank

flexibility we are Our banks needed recently the pandemic, very allowed amendment an which during for grateful. to additional COVID-XX for provide if

$XX.X at million inventory end of as with end compared the were the compared XXXX, DSO fiscal $XX.X March beginning the compared with as management was sales fourth to at XXXX. $XX XX, Day first the expenses reflecting March the capital of XX working XX accrued of X.X. million Trade of turns end December at compared the or $XX.X receivables million of $XX.X of fiscal Accounts XXXX quarter. million increased as beginning million with million outstanding to $XX.X payable of Inventory the was ongoing quarter and year. to XX, and at at fiscal

$X.X the The generated cash approximately company million during first of quarter. operations from

of March, availability of $X.X credit. approximately and line As million the Stuart at under had we our indicated end of

key debt, management, pay forward. will debt priority us. reduction, as the cash balance capital as down much generation, to de-lever going a Working remain We possible continue sheet will for

more company is times. Brands be investing a I've make questions, lot running great let that entire leaving will XXth. to in say for progress, working operations orderly will with shape SUMR made of get as much me the Ed the that with and that SUMR we've turning board in ready day our last categories, the being Before be for good and working coming some company. with team, smooth will the over product and in a June which transition feel streamlining investors some just our challenging my office retirement very I Brands through enjoyed I call weeks. I knowing the I ensure in profitable a

that, turn it operator With call to like open for the to over questions. the up and I’d

begin [Operator question-and-answer session the Instructions]. We’ll now

Mr. comes question first Private Investor. Our from Ed Reese,

see very job you started the give the wanted a you and Paul, an Paul, tell And how us I your to to quarter. strong helpful? guys. you give say on you us the the And give the sales February, see turns kind fairly half started January, can be would to things of But you in there, Stuart into could just through sales latter you of I been our a here trending, have retirement. clearly Stuart March, impact impact? know you good update of and that April to before on And an an of COVID-XX. of and Paul, May. of first you if congratulations kind just indication, questions the in you period. indicated us idea, ask part couple difficult in indicated can obviously, luck got Great that

can I in. But can right the business take thanks that thanks a very and and look We see Ed dialing you resilient add. Paul, now. questions for for

I with well surpassed that now. second retail the Obviously, fortunate And that's there our worst, that for quarter. planned we're facing customer expectations think of been, to it's We very be base tough many right a played products us are really and times now. team. real going planned open thought want for, out I to some we've in versus an to right very of don't we happen as our the but are management was we what majors been it the conservatively essential And the outpacing suppliers some call to-date. as has

point. we the about So decently this quarter second at feel optimistic

we only look good Ed, rather our the that the quarter, but certain you slowdown international were first accounts, stories months for focused our is categories a two really but in our retailers on to other were mostly accounts, March, and it was at saw business. One the and It well. specialty actually channels larger first mid tier us. still and accounts continue was January really really, when within and smaller affecting In the February very do quarter. accounts,

They've customers, up you second our quarter the customer make optimistic revenue XX% about and to Target. interesting stores look our their into they platforms during very their well, Walmart fairly pandemic. well open. this stores. Their closed top our kind of when going And customers never do are three move our we've you well people online. those It's at as we e-com seen as so top-line. and of And if business. buying remember, rather Amazon, remained top Ed, And three done And

is But optimistic the we're I month being So it quarter. first second definitely was by virus. us impacted about as how quarter, retail would in say the to an March we the adjust for uncertain

just that's performance of kind that maintained fantastic. have guys You

question of Another you most year. had into to mean I will realized likely that get at that you XXXX? in going, of How is half that second or given I that year that the cost is will the when of the $X that this be million look carryover going said first you the of be here is half savings

half things second March, be of like some this will look reductions, better. we No, some Obviously, portion of the until start overhead/staffing lease the of it, that. February,

in quarters, So we'll and that fourth see third the to continue Ed.

I maybe out, versus last the maybe can And at that you you point the lot to had reduction work when do capital, in the you of having at top-line a of on company cost a working working really into and costs obviously getting kind to some on last terms of the guys managing look where start company And fantastic much capital have grow? Stuart the doing more continue see question is you come today. front How when job stands about done efforts. more

that I and more feel still can comfortable get we efficient. find more

You a of percent come see our total business. inventory in turns maybe better down, at better that can import maybe get direct more we as the numbers

to cash increase business, needed unknown And make we of do still and focused sure was I we I manage a lot things we big capital have on positive continue call as up cash room focus out A on were pandemic. a for what are add business I any is what I think everybody there though One an few working set very, to to things. I'll to to the reasons. up at they go to little that. mean, So laser there, managing through we'll think was it through think being time. work

it away I we can do that that. But do affecting that. some chip of So continue think our we feel feel good is growth. good to we about at not

think I more getting we're doing. at efficient just what we're

really now. next into And product I'll year considered being and of upping the innovation a we're done and have on for in job call are year. front going great and retailers our I late that right teams in of sets that, new like think pressure about the, what things many excited those

you. Thank

Private Our Investor. next Epstein, question is from ahead. Please go Scott

Stuart and for the next best morning, I'd the on Good also wishing Paul. congratulations echo Paul as great to Ed and he offer to as and year, a like to moves my start chapter.

last see performance to forward up So the and into it's keep year, great of obviously XXXX. going since the end sustain

So that's great to hear.

side, question guess So inventory million. to I my first is just on is sales the the $XX down

was those feel much out so stocked traffic out you I because like lower. in you was, you did basically sales? the where are any you're confident on run your so like the you had demand traffic -- customers, it had channels And like the year-over-year? question pulled that inventory guess three Or given level in been do it perhaps just with business than And mean, forward, at see can seems you the in that areas you or even I missing feel -- can top I was some you're higher

up? do the deep is very whole and The especially I I trick how our sales it. need our do. business, focus are they frequently Do between teams, dives missed and think to when any importing forecast/demand think, Of and teams you SKU. we team the operations they with you're there renewed we at by the our good And buy, course,

hit POS our we be right in and surprise XXX%. thought would out is if said us I moving place probably And things guessed just not this going I quarter again ahead We the one tightened kidding green now data would been of the that the think I'd you into we it's everything Really, that. of pandemic, in all categories, have have the which, up. there. things many over did

the now and we too now It scramble that cash to product, the around is as then the whole sales do. turning have better that's stuff I sitting I on or don't drain with we at got the have too, just for do a But inventory not don't us. demand think helps sure it. think if try discipline any low. sales. lose forecasting So much and to which and us company helps for I you've better can become a of not lost has But you're get think, we

on get at can to efficiently need manage it continue we'll manage that So here to up line. the review, better a the when top pulling it, level want we inventory But we we and continue to. to turns to

X.X. inventory X.X really year were year to Scott, and look X.X. things a they to when were we remember the is now ago, on But we've have X.X, to there’s that our getting several It's into a end, one that have this things actually us looked that lot went At SKU the back number we've turns. done they're we allowed up at position. I amazing of work turns there our back get of SKU. to of us mean, and cut

We improved warehouse, We about our and of customers. our and orders BI of have XPL million ability we of servicing $X.X million we've same warehouse. I had UK to our $X.X to with forecast. inventory in our only And with pushing more think we're it closed replaced inventory that

look turns today, do getting lot a X.X a better. number. we where are a Stuart to. and is get I higher better, think gotten we into could all So little bit probably that can at what work But we've do turn both us and you that when think of inventory collectively even we we went we could

years, many finally become obviously and things some great as for, as basically like it's this reality. this longtime how about know hearing don't of great. investor And that's see even a Okay, I a, to

So it's great.

gross plays But in role in mentioned through QX. the the so I see outs margins was, balance makes warehouse Or drag just here. year? much should close little improve on a pain? Do the in similar that of we a close you pretty terms picture UK Are the in the amount of bit? question margin of you the know gross happening and out Next a impact. general,

Paul want if you to that? take

believe for behind UK certainly all us. We well, the warehouse out a lot, the close are

that in All off sold March. month the of of was inventory

already. pain that felt we So

Looking do forward turns at did we cleansing. our SKU of reduce and as we we better as looked kind of inventory, our lot count a inventory of

close before outs see year, we as we our talked So, with get been much that the the tariffs on I for items. very about were Also, future. burdened of don't believe in some the are we benefit to we'll able we've seeing last exclusions

that also those our improve items going forward exclusion will So margins to as going effect. the of

see either that So into slightly year. or margins you'll improve even I stabilized we get believe as the

just of trying all that looking $X is not. it And then I'm to balance want backed that's line. But come it of about just to there? the I in of figure a gross too exclusions year at going to, sounds if million to that know bulk the going see guess hit the G&A I've got don't low took or out if I'm savings know like of thinking the correctly to I'm in come out low? the correctly But I this the I if like QX. basically the looking in $X.X margin And post too report then some And I at Is am basically amount to -- or that the EBITDA and and I I million.

close. pretty numbers your Scott,

questions the answer quarter. did that in in it February of savings the the only whether we've first in the started we the is one seeing a lot our Remember seen of we quarter, was and earlier not March. and efforts or think first I restructuring restructuring

and improvement G&A now, going that $X in we're Right you're going will our So projecting million more see in second quarter. forward. costs around the G&A be third to

$X I around your $X.X think number, you million. So G&A. million said in We're expecting

our And QX. so results those of start in a in lot savings occurring will starting

the And closing any Noyes over This question-and-answer for turn [Operator I'd ahead. like Instructions] to conference our Mr. concludes remarks. go session. Please to

you. join everybody you to for forward want today's quarter. Thank look And speaking next I to call. thank again we just with

has concluded. you conference now attending Thank today's for The presentation.

may You now disconnect.