SUMR - Earnings call transcript Q3 2017

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Operator

Good morning. Welcome to the Summer Infant Incorporated Fiscal 2017 Third Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like moderator, to now Witty. Chris would turn over this the I ahead. go Please

Chris Witty

to CEO, and welcome Safe that and Infant's various actual report subject conference the Summer contained to forward-looking and Securities Bill and other uncertainties me to quarter Summer statements now These would materially year This beyond. call. on cause are and forward-looking for like company's Infant's outlook Commission. statements. call on Mote. Exchange factors is risks that could include for our the filings I today a to ended results Hello, differ Summer call the with statement. With relates to annual statements XX-K brief to in Infant the risk provide events December Messner; the XXXX and Form CFO, Harbor Mark in Please XX, XXXX from these refer third may and

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

a to financial please non-GAAP to Messner. of on more turn call that, to table the And For non-GAAP Mark? results over I Mark information see with the GAAP measures for release. included financial today's measures reconciliation in would like

Mark Messner

joining conference financial our the which Thanks, our Bill our Chris, Us. I'll impact quarter go is note make Toys customers which Babies you recent of by morning third 'R' overview of will Us, appreciate thing good quarter results of includes detail. giving after in developments important and filings We The Summer everybody. from Infant bankruptcy most the 'R' September start call. to an this through

income and on review this from sheet moment, results statement perspective. balance Bill both quarterly affected a development our on As

related of to about 'R' Babies lower year-over-year, curtailed. revenue Us, down Looking $X.X were sales as this performance, million at our $X.X million orders to with was top-line

We also continue to face a very monitor landscape. competitive

product not revenue quarter that shipping result and terms minute. deck older restocking we areas We over we're this million take receivables, obsolete which anticipate managing same I'll to exciting anticipate Toys turn for of the product higher do in will were bankruptcy be necessary introductions speak and quarter and sales in to the was products to rapidly impacted. However, $X.X it new to regard before. also to the QX. Us, capital. we counts our as filing. reducing 'R' With clear product customer new items increasing under conditions charge fourth some write And down to a determine more to now prior a these outstanding, We're actively working the this for and goal to certain inventory with and

So, this implement Toys to right forward. believe going handle implemented Infant serve appropriately the the customer and measures we Summer the from Us bankruptcy, has and 'R' continues fallout to

about starting highlights our with let quarter, some product me portfolio. talk Now other this

growth for double-digit strollers, aides. see across potties, including several to important and demand continue boosters We categories, strong sleep

this the the within not has discounting heavy be an blunt, monitoring these us market. offset competition will stiff enough and this were gains quarter tough shipment year. for and to extremely However, Us related 'R' encountered for area to I Babies delays been

too are there at As many many selling price in products the entrance monitor many space, I too said on prior calls, points.

in on share lost category, pioneers years. brand market our we're recent and we've this While both positioning

moon light we're believe roll-out with including this finally channel baby that products detection, innovation a product as beginning the revolutionary sales camera quarter, night stabilized monitor has to some and given third-party provide being monitor, to quarters does incremental channel not alerted about refocused and ongoing and However, We with pixel will strategy, result we as their remain through to We our wholesalers, use one activity These design of optimistic virtual come. pricing boundary and as and targeting. peace in such simplicity appropriate well products these will XXX stay jumping. vision see as to steering. more by tilt able crib parents mind believe features new such

we'll addition, presence should seats and tubs, be In our quarter, XXXX. new potties, market mini-stroller, introducing our into which bolster this heading super XD all

simple uptake restocking remainder of for to positive in compared trends expect look due QX, also revenue see in XXXX. more an for and We QX the to demand to

in refresh about also this We area. much bullish double-digit completely post making completed growth quarter, Notably, our channels potential this remain friendly. and website it refreshed more the - continue to we've e-commerce consumer growth across own

and what can top-line operations, review by move accelerate we sheet, maximum We of Toys when not believe tracking is and type online. the help easily 'R' parents and they what day, this third to performance have matter and growth. bolstering progress innovative are ensure customer's shop quarter potential indicative mind, with our results or balance visits time years. Revenue of the no and taken inventory made bottom-line used. features our were write-off compare and channel device these largely completely receivables. ease refocusing do products, The strengthen measures Us two for closing, overhauled and began In in believe brands our shopping investing to of past site strategy, of site bankruptcy the summerinfant.com, we impacted growth streamlining our in was will habits use we Now

quarter margins in margins. we given lead will Our and additions we space, channels and are we new we working taken we in even XXXX. biggest quarters the the no performance one, was improved have come, and already strong to to of number area maintain capital new out not third our overall a product disappointment to and grow aggressively. on hard but a on retailers steps off discipline for appropriate for tough where plans in higher as monitor manage Make growth the refocus believe particularly backing bring results mistake better operating our this QX, have the are was deck working We within cost and products,

Infant review quarter due We as I into about organization XXXX. we innovative product to investors it make strong should patience over for position in detail. would in thank that Bill? financial performance upbeat which the us are the for for turn known and Summer well like will to results trends With our an introductions, brands to and Bill, new I to our products. our order improved fourth again

Bill Mote

Thanks, Mark, morning good and everyone.

related release Our were last press and night. XX-Q issued

bankruptcy, million for of the quarter sluggish call, review related due Toys the discussed. XXXX. to monitor declined to I delays, approximately In third $XX.X you and addition, $X.X filings. by also for impact were Net versus Revenue this million quarter sales. as It 'R' $XX.X was negatively order listening our sales encourage to the the to Mark million, impacted of Us third

product fourth profit improve the new However, XXXX million, higher third our was quarter third on of gross million with was outlook. million rolling was in reduce impact the And about this million in year. indicate obsolescence lower to as near-term margins We'll in including as versus to order mix were margin in profit million to fiscal seems indicative advertising. pricing, taken XX% of activities primarily of QX positioning were this items for fiscal in last versus the costs. is quarter Selling $XX.X XXXX $XX.X two the certain decline of margin recent last fact quarter Mark XXXX. normal looking versus The to product The measures activity, approached XXXX. quarter, the due XX% for and inventory mentioned and cooperative administrative sales out General $X.X the of customer range, XX.X% the XXXX, and third costs quarter categories. million over $XX.X well trends, compared not expenses past demurrage as many sales to thanks year, general Gross gross years. more and $X.X the reflecting expenses $X.X initial that and optimistic of target in be the XXXX, quarter impact many levels within growth and across are

increase offset in share fiscal or reported the reversal in company $X.X $XXX,XXX of the amortization $X.XX as decline year-over-year we loss Adjusted primarily share with previously $X.XX million incentive per XXXX. due last to or in XXXX, The income recorded third G&A million, period, company's which million in bad net $X.X $X quarter. of for the as compared $X.X mentioned. a the lower depreciation per as to of net quarter Interest of million a to of in XXXX. reflecting for as prior while year, of recorded amended 'R' the third the included quarter million EBITDA percentage sales versus $X.X compared by Toys Adjusted XX.X% charge, add-backs of $X.X million from with second debt million and quarter $XXX,XXX third $X.X XXXX. bank by the rose EBITDA million a result this the the defined was the in quarter during for versus quarter compensation XX.X% expense expense plan, $XXX,XXX $X.X in charges revenue million of credit Us third quarter, for XXXX $X.X permitted third million partially and filings, the $X.X I of XXXX, the facility. charge the the just With third bad quarter we was to bankruptcy debt our of

facility to October dated the provide XXth, of financial a flexibility Summer in credit Infant result amended noted near-term Us As Toys existing release the its press bankruptcy. 'R' as

flexibility also that amendment to of to As with eligible amended the no again including receivables accounts. us base. advances any revolver deal made due the lenders company lenders to as receivables purposes eligible part after help violations of additional to for may appreciate of support adverse post-bankruptcy waived certain once steadfast accounts Infant loan permitting We the included were over to an our occurred longer deemed situation. Summer provisions qualify filing this provide have borrowing The

debt XXXX, $XX.X XXXX. million balance of Turning with as Inventory XX, of as of cash $XX.X of million as to was cash Infant sheet, September $XXX,XXX million December debt compared of approximately had XX, with on and Summer XX, million September $XX.X December $XX.X million XXXX. $X of XXXX compared and XX, the

We XX, of expenses payable the million with compared million the actively quality $XX.X of end compared continue merchandise year. with at $XX.X fiscal December were third highest were $XX.X to beginning accrued sale. the at as maintaining million the and million inventory, quarter XXXX September of XX, of while our manage Accounts XXXX. the $XX.X as for Trade receivables available

from we used cash flow, operations $X.X nine first XXXX. months cash generated year-to-date in Regarding $X.X million versus million the of during

improvement and it in up for it over We product to quarters in open questions. development to as I'll operator come previously that, initiatives discussed. cash even flow With we expect turn invest the

Operator

question-and-answer Dave begin King from question ROTH session. Please now ahead. comes First We'll the [Operator go with Capital. Instructions]

Dave King

guys. morning Good Thanks.

Mark Messner

Dave. morning, Good

Dave King

resumed maybe bit off, shipment first can think impact those from a those picture shipments guys. say 'R' $X.X them for sort Us Toys And is - you guess Us little have obviously talk the revenue more I going 'R' want expect since Did - what important was do million I those of and importantly have a an I Babies from bit, of revenue perhaps I guess this about bigger it delays. forward? to you you customer

you all from high got, about Given consumer the them thoughts? at Do that revenue expect away are in that are to how demand of you the current retailers? if prepping other some guess plans level you exposure How overtime? that are any what they've shift managing Thanks. I for thinking

Mark Messner

yes that in shipment normal they've haven't hope that with undoubtedly Yeah, able we're 'R' restructuring Toys doing things I to and was operating been that billion they're a and that do Us we gotten some plus they big Dave. mean $X to hit back

indexing with sales. while e-commerce over catch up So some to have customers all They do. other are

restructuring with I So should going do authority. as that some undoubtedly catch of up able baby be the to are to think specialty these they they

be the to we're of shifts. will we're with between deal key customers terms close In and those nimble as to tightly them aligned our there all shift with enough - will of stay customers and if occur shifts

them that hope ruling if a that's good the for restructuring to partner all enables they we're their some to core healthy do good of and get So - and healthier this drive let's them fundamentals are business.

Dave King

think you I then year-on-year guess then maybe had the bit is that be much no basis a no to about longer given some important - or also the when quarter driven And switching those the were you mix? lower in is that quarter strategy business monitor be enough. business of now volumes? strategy still Fair you business a that to gear would little in And declines the thinking of or your fourth just was longer will primarily how The a weighing of percentage how of when new the some quarter new could experience planned as be your monitors, that on for category. we up do ASP it how fourth actually should and that it

Mark Messner

business important to brand to making shift I from heavy The messy. a that messy entrance say new are it's to a is or very us. very online been just brick are and has still unbranded mortar, that of that would there very lot space business there

So I retailers monitoring told bragged and pixel we most they the reviews innovative line with category. have earlier, baby that in the video little bit it's have a major been item we seen about have had

shout some with the to innovation do, feeders innovation. to going the we're going bottom try that about going we're we're what So, and not rise up it going from mix it with to and trees we're true above to

Some the they have for with and difference quickly through the our going competition the one want versus they're moonlight and and gone have features make with protected people going our boost, in that night copy as past detection. and asking to to are going and trademark true hopefully want points in one in the against boundary we're on other. to as one can't a innovation bullet count They going vision item stores

for the on make asking and pixel that's to items hope a through be for in stop struggle going continue had they're going baby categories the and in some go we but that stores we loss quarter, I it's to sales, there. monitor category, to to a then I the fourth shipping drive the have the messy goal So other But luckily mean, and admit it's other up over the are category. bleeding but new to it,

Dave King

reduction the maybe like then sales, that comp, in this a bad back looks for was terms like you down run And of the core quarter, SG&A in one down it sort there the apart in it from was expenses you trends? down, one-time Bill, reversal? to if expenses I even How selling driving room more looks or charge guess, percentage much debt expenses I what's helps. right $XXX,XXX Thanks. of do That then rate? about can that have is of come a out And was a for those as talk the

Bill Mote

basis were Yes, to obviously. million really straight reversal $X.X is on it and for with the EBITDA judged incentive incentive our related comes kit, that accrual out - our our an EBITDA of

an So, from that debt for million an basis million $X.X year adjusted it out quarter. at million. on $X.X an accrual the basis perspective at $X.X we for the bad for needed reversal was to was reverse we're Last that and reserve G&A year for $XXX,XXX. adjusted On the last adjusting accrual

was have all the during happening is managed which have So have where it's that expenses progress during decline, we variable we about quarter. bankruptcy X.X% because we down our managed on good headcount, of quarter impending control our of this especially the

was did lot before the the that. end rumors actually at there of it quarter, but of a happen So,

time. well. bit say were So for would we for basis, I that's we G&A period little those discussed below would a to it a normal investments are manage year-to-date on in but G&A because a be, that rate we just the up have run of But a trying hard. that's we what year - simply managed

year, and basis simply marketing about making from XXX are because We points and that. spend up advertising last of

just BRU. the think quarter that G&A. basis I'd managed issue related because beginning at for guidance in with I on I of the overall, the simply acute the to a year So of same gave that stick percentage We

Dave King

Thanks make rest of of Alright, the and the that luck rest questions good my offline. the I'll take year. good for color. sense Okay,

Mark Messner

Thanks, Dave.

Operator

FBR. Eric Instructions] question [Operator Beder from with ahead. B. Riley next The comes - go Please

Eric Beder

Good morning.

Mark Messner

Hi, Eric.

Eric Beder

distribution Could your bit products? resetting? segmentation the where you been for from are a party gains what about you in pricing you that are little terms in talk have of And the third seeing better

Mark Messner

from past integrity away walked customers results year we've trying Yes focus on been in to core partners. those able price we've and improve moves. Those our to through over and retail the XXX

just are customers other up or integrity better. margins Amazon their retail like people price moving So is as because

customers So more to because the don't be that's have are those from moving and margins much on in to because they proper perspective going goods. their are discounting Summer as our good branded to us want direction with

there I has that's been So at noticing. think progress least really good there what we're

Eric Beder

you doing? accounts Amazon how now. if what take are of And How out right some are or working with bigger you is the that

Mark Messner

target Wal-Mart doing up. really is well. Amazon all

Buy but Buy little top So Baby we're good those movement challenging, showing with three.

Eric Beder

the terms is of how And that like in Okay. category? gating in doing things

Mark Messner

strong channel confident player expansion gates for expansion there 'XX. we and gates, other is in in anticipate 'XX. in of opportunity very We're for channel Yes we're gates but that

Eric Beder

And to the pixel Okay. baby that expect question do that last product already when the you stores? hit out product is

Mark Messner

will month water. seeing the another in start You that just hit

Eric Beder

Good season. Okay. luck for the holiday

Mark Messner

you. Thank

Operator

further I Messner Showing no our remarks. question-and-answer Instructions]. conference Mr. for [Operator closing to would turn to any over this the back like questions, session. concludes

Mark Messner

for Thanks the call. joining everybody. Alright

it optimistic a in turnaround we quarter, in you. Talk fourth. And tough look While to staying was with to touch forward we for remain next you the quarter.

Operator

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

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Summer Infant (SUMR) 2 Nov 172017 Q3 Earnings call transcript