SUMR - Earnings call transcript Q3 2021

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Operator

Good morning, and welcome to the SUMR Brands Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Chris Witty, the Investor Relations Adviser. Please go ahead.

Chris Witty

the XXXX to Call. Quarter welcome and SUMR Third Brands Conference Hello, me is CFO, and today the Bruce company's With call Noyes; the on CEO, Stuart Meier. Interim a would safe I to provide like harbor now statement. brief for forward-looking include relate Brands' may call XXXX statements beyond. This and to that SUMR outlook cause from statements to these could statements. forward-looking and events and uncertainties various These results risks to are that subject actual differ materially XX-Q annual and to Please our Commission. reports factors report company's on risk the quarterly Exchange Form the with refer on filings in Form in other and the its XX-K, contained Securities

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

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

Stuart Noyes

SUMR costs. thousands impacting affecting driving up to as challenges as a us around facing Thanks, you spoke, in I conference being faced rather joining was specific our operationally supply of very will results everyone. through availability developments, by organizations were by chain product issues we Brands, the start those When after our We and an recent well the providing go appreciate Chris, There today. I'll company which nothing the quarter which, call financial third the Bruce on morning, our entire team detail. last as and really industry. of involve good were overview globe, clear but

gone aware, have not listeners these As I'm away. our are sure factors

Their benefit have product restrictions, Net our our improvement the in domestic supply direct sales the also our logistical and $X.X has, chain ongoing best gates, However, category rose more of work gotten many $X.XX we $XX.X specialty high million. levels revenue year with per significant Many this with growth team, proven a solid adjusted at this avoiding $XX.X the shifting the were into situation. quarter improvement earnings experienced. EBITDA difficult certain blankets, entertainers, pandemic-related from over who quarter to versus quarter's some sales ability, of the a of consumers, and to import, forgiveness. We results, the the successful of during resurgent I'm at again, demand minimum, and million million, a over bottlenecks bathers, exhibit inventory managing across our pleased increased PPP million categories through second adept for a their continue of $XX.X to company offerings. core and quarter Even strollers otherwise that of substantial hands to loan X and excluding share saw the disruptions demand posted of ago boosters.

areas, increased would negatively have liked were costs. company's and, higher in product, top raw impacted particularly revenue we results material e-commerce by freight through some While through remain once line more channels, customers, strong. Bottom again to expense ship the

alternative greater we We are unusually be when routes continue and and mitigate control we our and more to ship to doing through possible high to issues available when to ship hard the channels. volumes rates to possible, expense. everything out when can forecast. direct these that import product Container aggressively additional raise offset But seeking opportunities prices are use

in anticipate have actions this these quarter again and of X. quarter help results will our All impacted positively we

subsiding. current appear last demand with have that to supply bottlenecks cannot quarter, can we And is satisfy. we be simply As the than that we more reality say chain

the total products various working available in-transit for are better a percentage this build at of level this parts are of sale inventory to of we time. to while However, hard inventory overcome a puzzle higher-than-normal

times, if certainty not. in this are, is temporary We chain at or with the supply say cannot improvement but seeing

efficiently in we necessary We review environment, debt sheet. company hand. As taking off mean in we that out will eye grow while a remain possible. quarter of we we the debt optimistic, balance cautiously as This is this sheet levels the delevering moment, ensure Rather, to further vigilant inventory took dedicated does Bruce operating this we doing capital Brands to the in keeping current on when SUMR not to had are predicament. on current will remain what issues low the our as handle possible. and balance are working In

let year. And Bruce, market additions over expansion new open overall believe growth for will to continue that to pet is our the the portfolio company. to on presence turning product track Before our our as we up well me add as help that of to next avenues call strengthen launch these

I thank new and our creating products, breadth increasing demand. we've on product Our teams focused marketing plans to to feel I'd our on of strategic past the XXXX about again depth year. implemented this steadfast investors for and their the optimistic once innovative are over given consumer execute broadening our brands and like ability the and vision. support

performance. we not the results That supply and of to that, taking the we were to pandemic, next the terms over team at of could predicted very review With I'll detail. turn they've the have chain in circumstance. the results during our and company proud extreme inefficiencies, operating to our have said, and unusual at Bruce to in been While I disappointment just SUMR of the growth it a been Bruce? mind never accomplish am financial level as point an what able

Bruce Meier

and good everyone. morning, Thanks, Stuart,

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

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

to the results. Now

global tariff been of higher. customers, the Stuart as percentage strong. items strollers, boosters; supply $XX.X opportunities, showing of the quarter second company's $XX.X And for XXXX. top Notably, without impact compared This channels, Gross mentioned, sales XXXX. certain gross was were The quarter through shipment as revenue million XXXX reflects in a year. many XXXX granted particularly year-over-year versus million, revenue no XX.X% entertainers, million and higher increase primarily $XX.X growth profit year-over-year XX.X% which, fact longer and million transportation from decline sales in net quarter in remain The and the margin sales chain. third of missed e-commerce material of versus and offset the improvement Third fiscal resulted product our margin in in in the last the the in $XX.X third costs specialty bathers, was by that an fiscal sequentially. XXXX, negative substantial quarter company's gates, would $XX.X have reflects receiving exclusions across were categories, challenges derived including million raw blankets, with of logistical

as benefit was in due of rates of and $X.X higher third facilities to sales expense permitted in the for and quarter expenses possible versus be when million versus threshold an margins share. period. was of million X.X% related net million net add-back year $X.X prices a appropriate. to change percentage versus recorded charges approximately improve the as prior XX.X% was provision prior And including quarter fiscal The freight-out million $X.XX reflecting distribution We interest year order per Selling the X.X% of net EBITDA with million demand the bank changes $X.X in safeguard period are the fiscal X.X% interest The versus in primarily in period quarter XXXX. quarter XXXX. XX.X% as million and year-over-year third $X.X The of compared in result cutbacks year-over-year of costs. a $X.X U.S. Adjusted $X.X when $X.X was fourth in XXXX. last Adjusted period. third XXXX versus more year tax a going $X.X quarter versus tax of of in in this increase well was $X.X G&A expense this for was comparable higher fiscal could customer-related or in year XXXX sales $X.X costs Interest $X.X million prior XXXX not that in the of the company quarter in $X.XX provision CARES a a per third million tax increase XX.X% year million charge-backs, General year credit was the company percentage to met. taking company's quarter percent EBITDA in reported of The quarter the raising add-back third XXXX by the the the of million every share million Adjusted quarter XXXX in impacted reflects forward, adjustment third the as in worth in period. million revenue versus XXXX. or as in versus the share with prior fiscal the per the $X.X and favorably XXXX. in $X.XX year. a percentage third administrative in million compared sales step refinancing XXXX a of in a XXXX, the attractive of Note following income EBITDA Act $X.X were deduction of third under million its of as $X.X included XXXX was

Turning to balance sheet. the

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

beginning accrued call of working beginning year. our with X, at as the of year. that, better were DSOs, Trade at million million XX X.X inventory the XXXX, requirements we compared Accounts was with end With over $XX.X As the were ensure compared payable open it million start questions. million XXXX, of fiscal X, the $XX.X the million debt to and expenses for capital January quarter available to receivables at I'll with were and third as market turns the Days of inventory the the year. quarter $XX.X manage and XXXX. or X, compared $XX.X of and as of of the Inventory as were XX million our to meet beginning Stuart versus turns up $XX.X October X.X utilized demand. turn outstanding, operator was fiscal of at at the mentioned, sales this October to XXXX, the $XX.X compared

Operator

Instructions]. [Operator

Beder Our today first Eric SCC Research. with from comes question

Eric Beder

Congratulations on muddling here. through

is How we a You about How more -- to direct some shipping shipped going of thinking continue thinking cost meet that. Obviously, piece to to helped think, continue, you it should going that you customer. there that your of -- to be forward? Is to about should talked obviously, key shipments the your this you going increase? a to do business? to be contract it Is be demands. we of

Stuart Noyes

the take start from customers. Obviously, first of with some with the Asia. in the or, different We're up number actually actually the We're working Yes, are it for freight certain be sure. going take because cases, to and POS -- our program that year. built, now takes the move freight customers they too, doing it to the and

Eric Beder

Okay.

So think that's to drag on to should kind that we about as -- be margins going a and going also? forward of continuing

Stuart Noyes

line, actually bottom top look, can if mean, may is I drag cases, the it's than better Yes. in actual the of revenue. the on many margins it And a the be to on line. -- it -- the some percent we

So the it line much line. top on -- the not but on so bottom actually

Eric Beder

Okay.

looking do or this other bit where of, of business new you gates And you possible customer us some the expand the lines with you product on guys Is know of great pet that? too? pet with kind guess, it information a I I are products. mentioned in more can terms that, You base initiative. and give to little a

Stuart Noyes

Yes.

right So working But we're that things that. kind on bowls -- now type categories, And line hour XXth accessories, time decisions it's or the at of leases, thing. collars, whether -- we're like it of line we're -- through kind to look, final the on will some product introduction be a that. then on of few the it's now,

although gates gates, be build we've you've we've early started, next see that. branding the new then will year. in marketing As And you'll to plans a already in mentioned, there place got that effort

customers, the thing. of online type And online would as more As know. and national then then it regional. go you to is an easy first on your question we start-up, is But

efficiently. we our through and the You get would quickly be mid-tier/specialty launch. as customers then to your things very on the it can SKUs placed, way that work like bigger later And

Eric Beder

you're going in And in also like do of going is able issues terms do to what you kind the of the Or same to that think to supply what be is it's start here? Or happening you? this you'd easing chain not versus up? for having to do

Stuart Noyes

obviously thing we're if launch one time or we categories are into supply then the is new having the want and that's of too, the to customer. type considering, to -- something the we're and It's with a because actually things of run chain is launch don't out-of-stock issues, right that what an when

about before look, we So there'll a the line we're careful. from being we're also walking that be very different launch And that times time why sure pragmatic that's to run of on lot and Asia. there. product But make comes

that same So challenges business logistical you're you're facing today. the in doing any

Eric Beder

last at you stay know product to trying availability the question. are pretty come guys your able you in to terms innovative And product. of manage I How been through? to while here to always innovative time same kind have Okay. get get and of

Stuart Noyes

out, actually development as have X Well, about road we Yes. and X years. a product years maps X is X,

be I working don't that on meet do call slow product. that it the launch hit on to it actually What the done. of can cycle Are a make getting down. And So make time? we we to the developing will consumers. you, to extra we still whole on getting but do want major sure it to launches in actually part into they team that. need customers? that's doesn't internally, don't down it easy go at shortening a tell production I It's in sure been we through week life we're review then That's look and our building -- to slow that or once part the team on weeks our hands

Operator

no further this At there questions. be time, appear to Instructions]. [Operator

turn back closing to for over any like Noyes Mr. the I'd So call to remarks.

Stuart Noyes

you, you. call. And speaking Thank everybody, to you joining very thank look we everybody in much. for for Well, next Thank us today's forward with quarter. our

Operator

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

You may now disconnect.

Summer Infant (SUMR) 11 Nov 212021 Q3 Earnings call transcript