- The document is an investor presentation from Summer Infant for March 2015 that provides financial information and discusses the company's strategy.
- Key highlights include Summer Infant having leading brands in juvenile products, positive industry dynamics with increasing birth rates, new management focusing on improving performance, and earnings expansion underway through cost reductions and margin improvements.
- Financial information shows revenue growth in Q4 2014 versus the prior year and gross margin expansion, along with a significantly reduced operating loss and higher adjusted EBITDA for 2014 compared to 2013.
2. 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 December 31, 2014, 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
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 December 31, 2014, 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.
2
3. Investor Highlights
Leading provider of juvenile products with strong, well-
known brands
• Summer - Monitors, Safety, Gear, & Bath
• SwaddleMe - Nursery
• Born Free - Feeding
Positive industry dynamics
• Increasing birth rates
• More Millennial parents with higher disposable income
New management
3
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
• Exiting poorly performing products / licensing arrangements
• Focus on high-margin categories and effective pricing strategies
4. Business Overview
Unique
Positioning
to Meet
Moms Needs
Brand
Creating a safe, calm feeding
experience
Innovative Care & Safety
products that provide
peace of mind
The authority on safe sleep
A Portfolio of Strong Brands with Focus on Key Parenting Needs
Serving Key Consumer Touch Points in Safety, Safe Sleep, and Feeding
4
Unique
Positioning
to Meet
Moms Needs
Key
Categories
Innovative Care & Safety
products that provide
peace of mind
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
6. Focused Brand Strategy
Innovative New Products
Unique
Positioning
to Meet
Moms Needs
Brand
Continue to strengthen Continue to strengthen
Focused Growth
Opportunity
HD Video Monitors
Available Now
6
Unique
Positioning
to Meet
Moms Needs
Focused Growth
Opportunity
Little Me / SwaddleMe
Co-branded swaddle blankets
Available Mid-2015
*Dates for availability are subject to change
Glass Bottles
Currently Available
Bottle Genius
Currently Available
Ultimate Pop ‘N Play
Available Now
HD Video Monitors
Available Now
Keep Me Warm
Available Now
Focused Growth Opportunity
3Dzyre Stroller
Available Now
7. Focus on Core Brands
• Reduction in lower profit licensed brands
• 2014 revenue from Summer owned brands
increased 8.75%
• Product innovation focus on Summer,
SwaddleMe and Born Free brands
• New product introductions each year
represent at least 20% of annual revenue
Focus on Core Brands & Channel Diversification
7
Baby Specialty 28%
E-Commerce 20%
Specialty 3%
Department Stores 3%
Discount/Outlet 3%
Mass 21%
International 16%
All Other 6%
2014 Sales by Channel
Babies R Us
BuyBuyBaby
(Excludes drop ship)
Canada, EMEA, APLA
Walmart (US)
Target (US)
(Excludes .COM)
Amazon
Diapers.Com
Zulily
US & INT Retailers
(.COM/Drop Ship)
Customer & Channel Diversification
• Top 7 customer; 74% 2014 vs. 78% 2013
• Increased focus and growth from e-commerce;
up 40% year-over-year
• Future revenue opportunities identified in
International, Specialty & Department Stores
• Working with select large retailers to enhance
our presence on their websites
• Working to improve mobile and e-commerce
capabilities on summerinfant.com
8. 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
CONFIDENTIALINFORMATION
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.
8
9. Expanding Digital Strategy
Video content for use on social, owned website & retailer sites
Email Blast to our Summer
Circle Subscribers
Sweepstakes shared across social media and website
Seeding & support for
Online Reviews
10. Turnaround in Progress
• New management
• Streamlined product focus
• Exited non-core areas & licensing agreements
• 140 bps higher gross margin year-over-year
• 32% increase YoY in Adjusted EBITDA
2014 Successes
10
• Target new markets
• Further expand margins
• Restructure credit facilities
• Drive cash flow
• Pay down debt
• Leverage G&A structure
Focus for 2015
11. Historical Financials
January 3, 2015 December 31, 2013 January 3, 2015 December 31, 2013
(unaudited) (unaudited)
Net sales $ 50,969 $ 44,738 $ 205,359 $ 208,173
Cost of goods sold 34,521 30,307 138,418 143,166
Gross profit 16,448 14,431 66,941 65,007
General & administrative expenses(1)
10,770 9,826 40,273 38,022
Selling expense 4,695 4,785 18,437 20,839
Depreciation and amortization 1,416 1,364 5,548 6,280
Operating (loss)/income (433) (1,544) 2,683 (134)
Interest expense 884 871 3,455 3,999
Loss before taxes $ (1,317) $ (2,415) $ (772) $ (4,133)
(Benefit) for income taxes (706) (737) (527) (1,318)
Net loss $ (611) $ (1,678) $ (245) $ (2,815)
Loss per diluted share $ (0.03) $ (0.09) $ (0.01) $ (0.16)
Shares used in fully diluted EPS 18,141,738 17,979,480 18,060,799 17,929,734
For the fiscal year endedFor the 3 Months Ending
January 3, 2015 December 31, 2013 January 3, 2015 December 31, 2013
(unaudited) (unaudited)
Net sales $ 50,969 $ 44,738 $ 205,359 $ 208,173
Cost of goods sold 34,521 30,307 138,418 143,166
Gross profit 16,448 14,431 66,941 65,007
General & administrative expenses(1)
10,770 9,826 40,273 38,022
Selling expense 4,695 4,785 18,437 20,839
Depreciation and amortization 1,416 1,364 5,548 6,280
Operating (loss)/income (433) (1,544) 2,683 (134)
Interest expense 884 871 3,455 3,999
Loss before taxes $ (1,317) $ (2,415) $ (772) $ (4,133)
(Benefit) for income taxes (706) (737) (527) (1,318)
Net loss $ (611) $ (1,678) $ (245) $ (2,815)
Loss per diluted share $ (0.03) $ (0.09) $ (0.01) $ (0.16)
Shares used in fully diluted EPS 18,141,738 17,979,480 18,060,799 17,929,734
For the fiscal year endedFor the 3 Months Ending
Q4 revenue up 14% vs. Q4 2013.
Full year, excluding discontinued licensed products revenue, was up 5.3% in 2014 vs. 2013
Significantly reduced operating loss YoY
Margin up 140 bps YoY
11
12. Balance Sheet
January 3, 2015 December 31, 2013
Cash and cash equivalents $ 1,272 $ 1,573
Trade receivables, net 38,794 34,574
Inventory, net 44,010 38,378
Property and equipment, net 13,080 14,796
Other intangibles, net 20,679 21,575
Other assets 4,632 4,471
Total assets $ 122,467 $ 115,367
Accounts payable $ 21,878 $ 22,072
Accrued expenses 8,628 9,658
Current portion of long-term debt 1,641 1,962
Long term debt, less current portion 57,097 47,756
Other long term liabilities 2,994 3,289
Deferred tax liabilities 2,378 3,140
Total liabilities 94,616 87,877
Total stockholders’ equity 27,851 27,490
Total liabilities and stockholders’ equity $ 122,467 $ 115,367
12
January 3, 2015 December 31, 2013
Cash and cash equivalents $ 1,272 $ 1,573
Trade receivables, net 38,794 34,574
Inventory, net 44,010 38,378
Property and equipment, net 13,080 14,796
Other intangibles, net 20,679 21,575
Other assets 4,632 4,471
Total assets $ 122,467 $ 115,367
Accounts payable $ 21,878 $ 22,072
Accrued expenses 8,628 9,658
Current portion of long-term debt 1,641 1,962
Long term debt, less current portion 57,097 47,756
Other long term liabilities 2,994 3,289
Deferred tax liabilities 2,378 3,140
Total liabilities 94,616 87,877
Total stockholders’ equity 27,851 27,490
Total liabilities and stockholders’ equity $ 122,467 $ 115,367
Inventory up 15% YoY down sequentially QoQ by 9.7%
AR increase due to 14% higher sales vs. prior year 4Q
Both contributing factors to higher YE debt level
13. EBITDA Reconciliation
January 3, 2015 December 31, 2013 January 3, 2015 December 31, 2013
(unaudited) (unaudited)
Reconciliation of Non-GAAP EBITDA
Net loss $ (611) $ (1,678) $ (245) $ (2,815)
Plus: interest expense 884 871 3,455 3,999
Plus: benefit for income taxes (706) (737) (527) (1,318)
Plus: depreciation and amortization 1,416 1,364 5,548 6,280
Plus: non-cash stock based stock compensation expense 209 164 1,220 893
Plus: permitted add-backs (2) 838 951 3,294 2,637
Adjusted EBITDA $ 2,030 $ 935 $ 12,745 $ 9,676
For the fiscal year endedFor the 3 Months Ending
13
January 3, 2015 December 31, 2013 January 3, 2015 December 31, 2013
(unaudited) (unaudited)
Reconciliation of Non-GAAP EBITDA
Net loss $ (611) $ (1,678) $ (245) $ (2,815)
Plus: interest expense 884 871 3,455 3,999
Plus: benefit for income taxes (706) (737) (527) (1,318)
Plus: depreciation and amortization 1,416 1,364 5,548 6,280
Plus: non-cash stock based stock compensation expense 209 164 1,220 893
Plus: permitted add-backs (2) 838 951 3,294 2,637
Adjusted EBITDA $ 2,030 $ 935 $ 12,745 $ 9,676
For the fiscal year endedFor the 3 Months Ending
Not included in the Adjusted EBITDA calculation is $1.1 million of costs associated with the recall announced in 2014.
14. Adjusted EPS Reconciliation
January 3, 2015 December 31, 2013 January 3, 2015 December 31, 2013
(unaudited) (unaudited)
Reconciliation of Adjusted EPS
Net loss $ (611) $ (1,678) $ (245) $ (2,815)
Plus: permitted add-backs (3)
479 648 1,884 1,796
Plus: unamortized deferred financing costs(4)
- - - 230
Plus: loss on certain close-out sales in January & February - - - 99
Adjusted Net (loss)/income $ (132) $ (1,030) $ 1,639 $ (690)
Adjusted earning per diluted share $ (0.01) $ (0.06) $ 0.09 $ (0.04)
For the fiscal year endedFor the 3 Months Ending
14
January 3, 2015 December 31, 2013 January 3, 2015 December 31, 2013
(unaudited) (unaudited)
Reconciliation of Adjusted EPS
Net loss $ (611) $ (1,678) $ (245) $ (2,815)
Plus: permitted add-backs (3)
479 648 1,884 1,796
Plus: unamortized deferred financing costs(4)
- - - 230
Plus: loss on certain close-out sales in January & February - - - 99
Adjusted Net (loss)/income $ (132) $ (1,030) $ 1,639 $ (690)
Adjusted earning per diluted share $ (0.01) $ (0.06) $ 0.09 $ (0.04)
For the fiscal year endedFor the 3 Months Ending
15. Senior Leadership Team
Carol Bramson 25+ Years Experience
Chief Executive Officer Strategic vision and management experience
Bob Stebenne 30+ Years Experience
President and Chief Operating Officer Adept at increasing business profitability
Ken Price 30+ Years Experience
President of Sales & Marketing Extensive customer relationships
Bill Mote 20+ Years Experience
Chief Financial Officer Deep global financial acumen
Anna Dooley 25+ Years Experience
SVP, Product Development Consumer driven innovation
Tony Paolo 30 Years Experience
SVP, Quality Assurance Commitment to exceptional quality
Ron Cardone 30 Years Experience
SVP, Information Technology Pragmatic approach to IT information resources
Mark Strozik 20+ Years Experience
SVP, Human Resources Strong talent management background
Carol Bramson 25+ Years Experience
Chief Executive Officer Strategic vision and management experience
Bob Stebenne 30+ Years Experience
President and Chief Operating Officer Adept at increasing business profitability
Ken Price 30+ Years Experience
President of Sales & Marketing Extensive customer relationships
Bill Mote 20+ Years Experience
Chief Financial Officer Deep global financial acumen
Anna Dooley 25+ Years Experience
SVP, Product Development Consumer driven innovation
Tony Paolo 30 Years Experience
SVP, Quality Assurance Commitment to exceptional quality
Ron Cardone 30 Years Experience
SVP, Information Technology Pragmatic approach to IT information resources
Mark Strozik 20+ Years Experience
SVP, Human Resources Strong talent management background
15
16. • New Experienced
Management Team
• Leading Designer & Supplier
of Juvenile Products
• Strong Well-Known Brands
• Positive Industry Dynamics
• Focus on Core Strengths:
Monitors, Safety, Nursery
• Targeted Growth Categories:
Gear, Feeding
• 2015 Year of Stability &
Earnings Improvement
Investor Highlights
• New Experienced
Management Team
• Leading Designer & Supplier
of Juvenile Products
• Strong Well-Known Brands
• Positive Industry Dynamics
• Focus on Core Strengths:
Monitors, Safety, Nursery
• Targeted Growth Categories:
Gear, Feeding
• 2015 Year of Stability &
Earnings Improvement
16
17. 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. The presentation
of this additional information should not be considered in isolation or as a substitute for results
prepared in accordance with GAAP. Summer has included a reconciliation of this information to the
most comparable GAAP measures in its filings with the Securities and Exchange Commission.
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 December 31, 2014. 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.
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. The presentation
of this additional information should not be considered in isolation or as a substitute for results
prepared in accordance with GAAP. Summer has included a reconciliation of this information to the
most comparable GAAP measures in its filings with the Securities and Exchange Commission.
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 December 31, 2014. 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.
17