summer infant investor presentation - september 2016
TRANSCRIPT
September 2016
Certain statements in this presentation that are not historical fact may be deemed “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and Summer
intends that such forward-looking statements be subject to the safe harbor created thereby. Such
forward-looking statements include statements regarding the market position of Summer; the growth
prospects of Summer; anticipated sales and operating results; the development of new products;
demand for Summer’s products; and Summer’s business strategy. Summer cautions that these
statements are qualified by important factors that could cause actual results to differ materially from
those reflected by such forward-looking statements. Such factors include the concentration of
Summer’s business with retail customers; the ability of Summer to compete in its industry; Summer’s
dependence on key personnel; Summer’s reliance on foreign suppliers; the costs associated with
pursuing and integrating strategic acquisitions; the costs associated with protecting intellectual
property; and other risks as detailed in Summer’s Annual Report on Form 10-K for the fiscal year
ended January 2, 2016, and subsequent filings with the Securities and Exchange Commission. The
information contained in this presentation is accurate as of the date set forth on the cover page.
Summer assumes no obligation to update the information contained in this presentation.
Safe Harbor
2
Investor Highlights
Leading provider of juvenile products with strong, well-known brands and emerging sub-brands
• Summer - Monitors, Safety, Gear, & Bath
• SwaddleMe - Nursery
• Born Free - Feeding
Positive industry dynamics
• Stabilization of birth rates and 1st child spend are up
• More Millennial parents with higher disposable income
New management
• Enhanced experience across functional areas
• Focus on improving operating performance, and reducing debt
Expanding revenue potential
• Focus on consumer driven innovation in core categories
• Expanding e-commerce opportunities
• International markets and specialty retail
Earnings expansion underway
• Streamlined operations
• Exited poorly performing products / licensing arrangements
• Focus on high-margin categories and effective pricing strategies3
Business Overview
Unique Positioning
to Meet Moms Needs
Brand
KeyCategories
Creating a safe, calm feeding experience
Innovative Care & Safety products that provide
peace of mind
The authority on safe sleep
A Portfolio of A Portfolio of A Portfolio of A Portfolio of SSSStrong trong trong trong BBBBrands with Focus on Key Parenting Needsrands with Focus on Key Parenting Needsrands with Focus on Key Parenting Needsrands with Focus on Key Parenting NeedsServing Key Consumer Touch Points in Safety, Safe Sleep, and Feeding
Leveraging Brand Positioning, Breadth of Product Offering &
Innovation to Improve Consumer Relationship
Monitors
Gates
Bath & Potty
Strollers
Travel Accessories
Highchairs/Boosters
Swings/Bouncers
Bottles
Pacifiers
Teethers
Feeding
Electronics
Wearable Blankets
Infant Sleep Aids
Bedding
4
Business Overview
Monitors Expansion
Social Engagement
Content
Apps & Software
Expansion
Monitor
Nursery
Feeding
Safety
On-the-Go
Demonstrated Strength in New Product Development
Monitors
Summer Smart
Product Refresh
SwaddleMeLine Expansion
Refreshed branding
Safety
Pop sub brand
Gear Expanded Stroller line
2016 Opportunities
5
Product Priorities
Nursery Baby my Baby
sub brand
Feeding New Bottles
Kiddo The fun sub
brand
Understanding Millennial Moms
59% bought a product
recommended by
another mom on a parenting site 44% make
purchases online via their
smartphone
85% of the time they spend
online is using
APPS
9,000 Babies each day are
born to our Millennial Mom
Millennials
represent $170 billion in annual purchasing power
Connected:
Texting, pinning, tweeting, status updating; she
spends on average 17.4 hours a week on Social
media.
Believe strongly that recommendations by other parents (46%) and experts (35%) is
important
Share Everything/Share Often:
Online and in-person, she talks about her product experiences and solicits feedback from her peers
when planning a purchase.
6*various sources and Company data
Understanding Millennial Moms
Retail Partners
7
Focus on Core Brands & Channel Diversification
Focus on Core Brands
• 2015 sales from core brands increased 6.1% on
a constant currency basis
• Reduction in lower profit licensed brands
• Product innovation focus on Summer,
SwaddleMe and Born Free brands and sub
brands
• Goal of new product introductions each year
representing at least 20% of annual revenue
Customer & Channel Diversification
• Top 7 customer; 73% 2015 vs. 74% 2014
• Increased focus and growth from e-commerce; up
15% year-over-year
• Future revenue opportunities identified in
International, emerging sub brands, and new
product introductions
• Working with select large retailers to enhance our
presence on their websites
• Working to improve mobile and e-commerce
capabilities on summerinfant.com
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
2012 2013 2014 2015
Sales by Brand
Summer Owned Brands Private Label Licensed Brands
All Other
6%
Baby Specialty
24%
Dept Stores
3%
Discount/Outlet
3%
E-Comm
23%
International
15%
Mass
23%
Specialty
3%
2015 Sales by Channel
Babies R Us
BuyBuyBaby
(Excl Drop-Ship)
Walmart (US)
Target (US)
(Excludes
.COM)
Canada
EMEA
APLAAmazon
Diapers.com, Zulily
(US & Int Retailers/Drop Ship)8
Turnaround Progressing
Recent Successes
• Released multiple new products with 4+ Star ratings
• Exited non-core areas & licensing agreements
• Reduced operating costs by $4M
• Reduced inventory 17% and working capital by 30%
• Restructured credit facilities saving $1M in cash
annually
2016
• Grow sales by targeting new markets & developing
sub brands (Kiddopotamus, Pop, Baby my Baby)
• Expand margins via new releases and improving
running line margins
• Drive cash flow
• Continue to pay down debt
• Leverage G&A infrastructure9
� Babble Band™Wearable Audio Monitor
o Soft silicone wristband adjusts to fito Voice-activated (VOX) audio monitor
up to 800 ft. rangeo 3 monitoring modes
o Baby unit is recharging baseo Rated 4.4 stars
� Liv Cam™On-the-go Camera
o Peer-to peer WiFi with easy setupo Free APPo No cellular data chargeso Compatible with iOS and Android devices
o Travel-friendly mounting options
o Automatic night vision
Summer Monitors
The Bump - Best of Baby 2016
Innovation Award
10
11
Summer Safety
� My Size Pottyo Look and feel of an adult toilet o Helps ensure a comfortable and confident
transition to the real thing.o Toilet handle makes a flushing sound o With built in wipe dispenser
o Exceeding all expectations
o 4.3 stars on Amazon
� Waterfall Baby Bathero Soothing waterfall feature circulates water to
help clean and warm babyo Removable bolster to support newborns
12
� Evolv All Terrain StrollerKEY FEATURES• Trunk friendly fold, 2 modes:
• Jogging – front wheel locks forward for added stability when running
• Everyday – front wheel flips back into swivel mode • Large oversized canopy with peek window and reflective
details• TONS of storage – parent tray with cup holder, mesh
pocket & cell phone holder, middle mesh storage bag, lower storage basket
• Adjustable handlebar • Bluetooth speaker for handsfree jogging
� 3D lite Convenience Stroller
o one of the lightest and most feature rich convenience strollers on the market.
o easy to fold frame and
carry strapo Consumers Digest Best Buy
Summer StrollersIn Industry Top Five in 3 Years
13
� SwaddleMe – 4 Stages of Swaddles
o SwaddleMe knows that when your baby sleeps better, you sleep better. Our entire line of sleep products has been expertly designed and tested to keep babies snug, safe, and comfy every night throughout their first year.
SAFER SLEEP. BRIGHTER DAYS.
SwaddleMe Wearable Blanket• Mother & Baby Awards, Best Newborn Sleep Aid – BRONZE 2010• She Knows Parenting Awards 2013• American Baby, BESTS 2013• Mom’s Choice Awards, SILVER 2015
14
� Born Free® Breezeo With only two parts, the Born Free breeze™ glass
bottle is the easiest to clean bottle system that both you and your baby will love. The anti-colic design ActiveFlow® vent puts baby in flow-control. Breeze BPA-free glass bottles are made from ThermaSafe™ glass and can safely go from freezer to boiling water.
o Rated 4.8 stars
Born Free Breeze BottlesThe Bump Best of Baby Awards 2016
15
� KiddopotamusSuper Duper Seato 360 degrees of floor time activity
fun & booster in oneo Soft foam Support seato Activity Seato Booster seat
16
� Pop Line – Portable On The Go ProductsPop ‘n Jump is the perfect entertainer for parents and babies on the go! It’s compact, light-weight folding frame
comes fully assembled and sets up in seconds.
• Pop ‘n Sit Portable Booster makes feeding time easy with a removable, BPA free tray, innovative pop and fold set-up, and over the shoulder carrying bag.
Rated 4.8 stars
• Pop ‘n Sit High Chair is perfect for dining on-the-go or even in the patio with your little one. When your baby needs a place to eat, just pop it open.
• Pop’n Play Ultimate Playard allows you to create a safe portable play area for baby.
Consumer Digest Best Buy
17
� Baby My Babyo The Summer Infant Baby My Baby collection offers
products that enhance the natural benefits of infant massage. This line, the first of its kind, was designed to inform parents about the benefits of massage for both baby and caregivers and to provide them the perfect products to facilitate a wonderful bonding experience.
18
Recent Financials
Gross Margin Growth Year/Year
19
July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015
Net sales 50,575$ 51,807$ 100,245$ 104,820$
Cost of goods sold 34,374 38,036 68,318 74,074
Gross profit 16,201$ 13,771$ 31,927$ 30,746$
General and administrative expenses(1) 9,981 11,972 20,734 22,282
Sell ing expense 3,901 4,308 7,817 9,176
Depreciation and amortization 1,160 1,318 2,316 2,652
Operating income/(loss) 1,159$ (3,827)$ 1,060$ (3,364)$
Interest expense 628 1,318 1,268 2,164
Income/(loss) before taxes 531$ (5,145)$ (208)$ (5,528)$
Income tax expense/(benefit) 275 (1,672) (131) (1,813)
Net income/(loss) 256$ (3,473)$ (77)$ (3,715)$
Income/(loss) per diluted share 0.01$ (0.19)$ (0.00)$ (0.20)$
Shares used in fully diluted EPS 18,421,955 18,230,893 18,403,852 18,204,545
(1) Includes s tock based compensation expens e
Three Months Ended Six Months Ended
Balance Sheet
Restructured Debt, Reduced Inventory, and
Lowered Working Capital Needs in 201520
July 2, 2016 January 2, 2016
(unaudited)
Cash and cash equivalents $ 1,147 $ 923
Trade receivables, net 38,329 40,514
Inventory, net 36,633 36,846
Property and equipment, net 11,311 12,007
Other intangible assets, net 18,159 18,512
Other assets 4,612 4,336
Total assets $ 110,191 $ 113,138
Accounts payable $ 28,898 $ 29,541
Accrued expenses 8,975 9,584
Current portion of long-term debt 4,519 3,318
Long term debt, less current portion 45,788 48,767
Other long term liabil ities 2,768 2,962
Total liabilities 90,948 94,172
Total stockholders’ equity 19,243 18,966
Total l iabil ities and stockholders’ equity $ 110,191 $ 113,138
Adjusted EBITDA & EPS Reconciliation
21
July 2, 2016 July 4, 2015 July 2, 2016 July 4, 2015
Reconciliation of Adjusted EBITDA
Net income/(loss) (GAAP) 256$ (3,473)$ (77)$ (3,715)$
Plus: interest expense 628 1,318 1,268 2,164
Plus: expense/(benefit) for income taxes 275 (1,672) (131) (1,813)
Plus: depreciation and amortization 1,160 1,318 2,316 2,652
Plus: non-cash stock based compensation expense 91 246 218 419
Plus: permitted add-backs 977 4,416 2,866 5,015
Adjusted EBITDA (Non-GAAP) 3,387$ 2,153$ 6,460$ 4,722$
Reconcil iation of Adjusted EPS
Net income/(loss) (GAAP) 256$ (3,473)$ (77) (3,715)
Plus: permitted add-backs 977 4,416 2,866 5,015
Plus: unamortized financing costs - 685 - 685
Tax impact of items impacting comparability (342) (1,658) (1,003) (1,870)
Adjusted Net income/(loss) (Non-GAAP) 891$ (30)$ 1,786$ 115$
Adjusted Earnings per diluted share (Non-GAAP) 0.05$ (0.00)$ 0.10$ 0.01$
Three Months Ended Six Months Ended
Investor Highlights • Leading Designer & Supplier of Juvenile Products
• Strong Well-Known Brands
• Positive Industry Dynamics
• Experienced Management Team
• Focused on Core Strengths: NPD, Leveraging our Brands, and Operational Excellence
• Targeted Growth Strategies in all our Product Categories
• 2016 Leverage Infrastructure
22
Use of Non-GAAP Financial Metrics
This presentation includes certain financial information not derived in accordance with generally
accepted accounting principles (“GAAP”). This presentation includes references to EBITDA, which is
defined as income before interest and taxes plus depreciation, amortization, deal-related fees and
non-cash stock option expense. Summer believes that the presentation of this non-GAAP measure
provides information that is useful to investors as it indicates more clearly the ability of Summer’s
assets to generate cash sufficient to pay interest on its indebtedness, meet capital expenditure and
working capital requirements and otherwise meet its obligations as they become due. This
presentation includes references to adjusted EBITDA and adjusted earnings per diluted share.
Adjusted EBITDA is defined as income before interest and taxes plus depreciation, amortization, non-
cash stock option expense and bank permitted add-backs.”
Recipients of the presentation and other interested persons are advised to read all reports and other
filings made by Summer with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and Securities Exchange Act of 1934, as amended, including, but not limited to,
Summer’s Annual Report on Form 10-K for the year ended January 3, 2015. You can obtain a copy of
any of these filings, without charge, by directing a request to Summer Infant, Inc., 1275 Park East
Drive, Woonsocket, RI 02895, or on the Internet at the SEC’s website, www.sec.gov.
23
Thank You
24