SUMR - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the SUMR Brands Fiscal 2020 Third Quarter Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. is event this note being recorded. Please now Chris Witty, would like to to over conference the Investor turn I Relations Moderator. Please go ahead.

Chris Witty

XXXX to Brands' me Statement. may that today like to Hello conference This CFO, Ed subject CEO, call to welcome Form the a XX, actual outlook on refer forward-looking Report would XXXX in are and XXXX and to and and these differ various statements Brands’ contained relate and now that I third risks reports Stuart Annual December other call. beyond. Noyes; With statements the our brief on include in Please could results materially is call Form the provide for its quarterly and XX-K forward-looking Schwartz. cause the These SUMR company's Interim filings to statements. SUMR XX-Q quarter Safe to factors with company's uncertainties the for risk and on SEC. the events the ended from year Harbor

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

that, Stuart. on Stuart financial like included to information with results to issued to please in release over tables see non-GAAP turn call Noyes. the the I'd a more For non-GAAP And recently. measures reconciliation measures, the for of GAAP company's financial

Stuart Noyes

results go Thanks appreciate overview financial by providing developments an Ed after our in recent quarter detail. Chris joining start through and I'll morning today. conference good everyone. We will call third you of our which

well from particularly quarter the quite XX.X the the was million. economy general. of last second prior As accomplishments of recorded the the has business pandemic quarter We in was third down which proud increase ongoing of XX.X as although from sales our one which impacted a slightly the periods, net this million, as many sequential in year we're year’s given case

gates, While certain bathers point of growth well new brick COVID-XX increasing double-digit and including as due of across and specialty potties, mortar face we categories we and our headwinds retailers. product with purchase solid as the many to still system with particularly saw mid-tier year-over-year travel our key traction

addition strategy restructure and our to streamline In impacted international line sales and results. our direct announced had previously to import operations top move more negatively

XXXX We successfully million operations streamlined chain disruptions outlook and equity. continued of in as and SG&A three some greatly large on in also where results over strengthen when as our one-time circumstances under we We they XX.X% really footing a this to Once in on And this. a year. X.X% revenue in million posted well the are and We These EBITDA the discuss the cash enterprise I this our quarter margins and from million. more continue improved in increase to After quarter. our streamlining operations and EBITDA thoughts I $X.XX focused way cash on are of see as and reported many supply was drive to performances on well. eliminate come EPS -- us from illustrates the from as flow know of last X.X with We the restructuring a% the but but EBITDA. well adjusted of into end ratios adjusted annualized year-over-year to normal quarter were which XXXX. do well of solid we've already Year-to-date I'll and to fourth refinancing much return nearly again positioned nimble we of focus company in EBITDA expense free you which of this to falling XX XX.X% debt reduced completed such issue quarter as a on lower selling much international and our are on expense down for our that million cash transformed remain places declining G&A expenses XX.X to EBITDA of produce flow. investors back two X.X% positive moment adjusted interest our initiatives completing to for importantly also on and sales from X.X the improve in overhead helped generated in track burden. quarter items

these to million in but allows agreement refinance moving and that and sincerely the we new speak want Bank many Brands commitment new while to and at continue Ed whenever availability reducing in our X are I of through forward. their X company of after SUMR of loyalty the facilities. the up expected support save million possible. thank roughly more we'll moment actively for indebtedness America for liquidity credit will ongoing had providing million to aggregate annually years XX interest a rates of Our this of the to their borrowings necessary

wanted we have call about experiencing. been recently quarter the Ed, and the and fourth to Before some industry I the to turning over talk increased challenges

particularly may you or impacting product expense. to supply within time market, the for the are As significant shipping chain not problems numerous may logistical there availability, consumer aware, be facing and goods, sector

the bottom for to retail by costs This those working increasing the Brands the challenges store Brands leasing. are And this congestion freight ships there. is that across SUMR large numerous tariffs us capacity of space, on requiring not quarter inventory the are these already the delivery top time, to the reinstatement supply this line, container, our of are includes some port to companies truckers we that there's by at that blinded as Such even in the Things warehouse others investors QX. amount long credibility throughout that the unloaded on or due many just the shortages to this we've We selling time, tying up a fact Beach to this of Long Xth, chain while in including and and products way issues we in face where All upfront at impacting bottlenecks, of and material Covid-XX issues and costs make there's with XX% manage are numbers on down to including waiting means may and having year a pursuing to that and logistics included. in there's integrity. SUMR on around goods of QX’s Pacific products such near-term just work companies price on caused headwinds I of August of items and warehouses. to are wait fourth the many and sure stretching capital these impact a be limitations large SUMR offshore online. aggressively of not be reported backed market both our XX% impacting wanted is getting Specifically, to board up and be about to has investors past impact actually facing vessel, this trucks, extent, we our compared come their feel. we what sitting are to consumer and work these restored anticipate mitigate some EBITDA

positioning and company, where I solid has going In that [ph] improving this line SUMR I these are for With In definitely for streamline far that, made committed near-term forward. review the results This company higher detail. headway and company and returns create something underscores So customer that footing. its we've turn come hasn't team that performance. the financial or healthy just issues Without everything to on the in many continue over last initiatives not is question, The changed. we The tremendous results. I'll the the future. closing, us solid year, to to keeping share a improve bottom wasn't wanted and impacting believe case thing reduce to navigate in credit before. doing possible our to we're Ed. Ed responsiveness results positioning while was Brands facilities really driving how recent it through to to refi the costs, higher the enterprise

Ed Schwartz

good morning, Thanks, Stuart and everyone.

our reminder, and issued. XX-Q related previously press were a As release

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

of in quarter sales XX.X net compared quarter third Third million, million were with XX.X XXXX. fiscal the

was the the operations, largely our more sales, due import store a direct and supply Stuart revenue closures and to certain international impact move from disruptions. lower chain to related from restructuring toward As mentioned, primarily COVID-XX

XX.X we tariffs lower The in XXXX. quarterly issues million fewer with the certain profit favorable as our sales quarter And While XX.X% supply XXXX. was mix the to the close for margin XX.X% results, last challenging. XX.X XXXX was of higher forward gross pleased are with we cautious percentage versus due third and year. fiscal remain versus categories, gross as items million of product sales, increase reflects continuing out and a profit margin that Gross remain uncertainty of going compared a on chain economic

However, cost tariff has December as tariffs you mitigate through reinstatement strategic of expired The exclusions action previously noted, we impact supply reductions. received company pricing, management, some in taken the August of year. this XXXX to chain since and

the the mitigate of in percent in third quarter decline million XXXX. period. X.X operate Selling labor to costs. the in administrative various the was get in X.X expense by quarter income the mentioned, lower U.S. in third versus were record QX included year October extent million a a as freight credit one-time of XX.X% quarter the deduction XX.X% And or loss completed Although change X.X our the quarter per for year. adjustment share. our was was The a XXXX million XXXX, in third threshold net versus G&A were in $X.XX as initiatives expenses XXXX per interest of XXXX. period this third to and in facility, other percentage of a year XXXX compared CARES as new year exclusions was adjusted was the third versus of under which quarter an costs permitted sales of lower with Act. in $X.XX million was in in X.X which interest compared X.X% of X.X X.X Stuart last on versus was the million percentage EBITDA quarter versus as was results Cash third current we a expense primarily the The XXXX. back under and million X.X expense year million XXXX last X.X in $X.XX the a the this period bank Adjusted net X.X or add in year The to XXth. XXXX XXXX. share year-over-year tax of loss prior of X.X percentage sales of the through we will as undertaken can favorable In million of prior with year-over-year basis, tariff X.XX year, adjusted decrease versus X.X the per Adjusted fiscal company sales EBITDA million advertising reflects million EBITDA due charges third year. uncertain. quarter changes to Interest On included period. sales company in in prior X.X% related streamlining the million of And remains share. earnings and million X.X% and versus our as year prior XX.X% provision net X.X the net General

could a as of QX variety in as possibly much logistics to management XX% and chain QX. Stuart mentioned, by to reduce EBITDA issues adjusted XX% versus supply As related

million million new the a entered loan off of million $XX.X On security XXth, September facility paying debt beginning of an Capital X.X balance ABL, and with ABL XXXX of prior credit X X.X $X.X had America. million in in facility. aggregate Bank bank million existing credit restated of Bank cash into availability X.X the a million. as debt amended amount loan cash our agreement bank third a and and of replaced the million loan of XX, had XX company compared company term and October the the The of of sheet, debt, approximately America XX.X with to Summer Turning XX.X filo with at a XXXX. approximately and million After under fiscal Infant $XX million $XX.X million with new and term million for loan, Pathlight of consists that

working year. quarter XX.X the million to the XXXX. compared Day Trade XXXX. XX, are end sales manage X.X excess use to XX.X beginning pay the XX the at I'll to the XX.X the with XX.X year. XX year. debt call accrued were third fiscal the turns for December compared continue and whenever XXXX end XX.X our possible. of at expenses DSOs up will XX.X payable the million million cash appropriately down the Inventory the beginning at as million of over was of that, outstanding We inventory million, were compared open turns of X.X at at with as were September at of operator compared questions. versus And receivables With of or with million Accounts the the fiscal it to September beginning and XX, of as of start turn capital and

Operator

Thank you. [Operator Instructions].

Mark question go Gomes ahead. with Data. comes from Our Please first Pipeline

Mark Gomes

gentlemen, progress the year. congratulations this on Hey

the was Looking near-term looking you candor at before there. kind into guys past have this a at though, EBITDA an and deeper of million look profitable past year financials beforehand, we in. lot of could of the go maybe you caught the company appreciate got wondering looking Kind COVID outlook kind of as be X.X and that we normalized expenses XXXX,

you're XX compare end start like million how EBITDA does to our think you XX or Thanks. what to to DCF to looks or build do of we it long can term going with -- those base models? million year with attempt the company valuation that maybe as the total, So rejigger

Stuart Noyes

Ed, that go ahead you can one. Yeah, take

Ed Schwartz

completing to budget we've sure as the looking XXXX as as for we doing but Yeah headed our type of in things right EBITDA to going guidance don't you give been process the direction. about continue the in that Mark, And we talking much the can year. are same make and that know, the to keep we number look, we're we're we do it at of upcoming

can. was happening trying and back what revenue under We're build we're growth the we show of watching do growth. so on we're some everything we side bit doing expense So little to a

Mark Gomes

to we it guidance, assume cost well, that Right, to so is that remained competitive safe allowing that can level gained, in make baseline at addition any for to is has getting some if that, so positioning your assumptions on it your your same stand from scenario that where EBITDA based thus of out? prior assume improved, we the without least not to unreasonable efficiencies play

Stuart Noyes

just say they've customer -- we're still positioned not service managed four safe I we're cost obviously, competitive which, this and product we big going -- Ed other Mark. forward, look pandemic think to. will kind it initiatives that talk big or based another There's there. the and to and the continue base. about of that of on teams the have what the redeploying whether us us kind every is marketplace in actually to mean, lot to But well I even with to mean, I capital, that's I in you that I forcing we of we at Yeah, our as from day area to through business -- do, selling yet. a feel do react our marketplace unknown teams one moving says, side you'll to the know Obviously, three, how our

Mark Gomes

once could down, and that is kind to there you things level get headwinds a brick serve these sense of do as is the tailwind up mortar demand there at start pent -- retail abate? that that And Great. as the settle

Stuart Noyes

out that's there. an a Yeah, seeing and it businesses. my is I I'm pandemic opinion. on with and just you're throughout the level I lot it uncertainty what's opinion got mean mean going all I and of on just stimulus, is, your potential this look, federal at there's think, elections everybody's sure and it

just take of things I think away, of we advantage economic position ourselves keep so, a do that. of in I And little do the been But, a right bit look right to to there's environment now. plugging -- there's feel air that suck we

here we to our little and Lunar going a advantage could in that to on a did items we sure on New position, the bit key based or consciously of through forward inventory in what see a economically make that. were be You take we etc., whether built that position of it happen Year,

Mark Gomes

have and for similar -- intent with in what long-term the an in living do that plans you're have you that gets status that company question. the you sold? your What incentives for obviously the CEO, what the considering place Interim are company final you Great, as the event a

Stuart Noyes

got Yeah, locked might focused coming were I getting this which through get we now I Friday. as stabilization right I very in Board middle of mean, and we've loaded have mean, a mentioned. XXXX the Meeting think up mentioned this look I XXXX on before, budget wise, forecast And we're Ed

that that develop So are we'll continue focused on this we'll But and at type things continue of we to as timeline long-term. point, Interim on to Board. talk CEO right and with making the on business update just But you about that and near the thing.

Mark Gomes

gentlemen. thanks Great,

Stuart Noyes

Thank you, Mark.

Operator

[Operator time, queue. further there back questions like would Instructions]. to remarks. be closing Mr. no to over Noyes in it appears any I turn At for this the to

Stuart Noyes

Thank for call. next I it. nice quarter. us for you forward Thank all with Great, look We everybody today's joining appreciate day. the speaking to you. Have a in

Operator

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

now disconnect. may You

Summer Infant (SUMR) 12 Nov 202020 Q3 Earnings call transcript