Summer Infant, Inc. (SUMR) 2021 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the SUMR Brands Fourth Quarter Conference Call. (Operator Instructions) As a reminder, this conference is being recorded today, March 17, 2022.

女士們、先生們，早安，歡迎參加 SUMR Brands 第四季電話會議。 (操作員指示) 提醒一下，本次會議將於今天（2022 年 3 月 17 日）進行錄製。

I would now like to turn to Chris Witty, Investor Relations Adviser. Please go ahead.

現在我想請投資者關係顧問克里斯威蒂 (Chris Witty) 發言。請繼續。

Hello, and welcome to the SUMR Brands 2021 Fourth Quarter Conference Call. With me on the call today is the company's CEO, Stuart Noyes; and Interim CFO, Bruce Meier.

您好，歡迎參加 SUMR Brands 2021 年第四季電話會議。今天與我一起參加電話會議的還有該公司的執行長 Stuart Noyes；以及臨時財務長 Bruce Meier。

I would now like to provide a brief safe harbor statement. This call may include forward-looking statements that relate to SUMR Brands' outlook for 2022 and beyond and the pending transaction with Kids2. These forward-looking statements are subject to various risks and uncertainties that could cause actual results and events to differ materially from these statements. Please refer to the risk factors contained in the company's annual report on Form 10-K, its quarterly reports on Form 10-Q and in our other filings with the SEC.

現在我想提供一份簡短的安全港聲明。本次電話會議可能包括與 SUMR Brands 2022 年及以後的前景以及與 Kids2 的待定交易相關的前瞻性陳述。這些前瞻性陳述受各種風險和不確定性的影響，可能導致實際結果和事件與這些陳述有重大差異。請參閱公司 10-K 表年度報告、10-Q 表季度報告以及我們向美國證券交易委員會提交的其他文件中包含的風險因素。

During the call, management may make references to adjusted EBITDA, adjusted net income and adjusted earnings per share. These metrics are non-GAAP financial measures, which the company believes investors -- help investors gain a meaningful understanding of changes in SUMR Brands' operations. For more information on non-GAAP financial measures, please see the table for a reconciliation of GAAP results to non-GAAP measures included in the company's financial release issued yesterday evening.

在電話會議中，管理層可能會提到調整後的 EBITDA、調整後的淨收入和調整後的每股盈餘。這些指標是非 GAAP 財務指標，公司相信這些指標可以幫助投資者深入了解 SUMR Brands 營運的變化。有關非公認會計準則 (GAAP) 財務指標的更多信息，請參閱公司昨天晚上發布的財務報告中的公認會計準則 (GAAP) 結果與非公認會計準則 (GAAP) 指標的對賬表。

And with that, I'd like to turn the call over to Stuart Noyes. Stuart?

接下來，我想將電話轉給斯圖爾特·諾伊斯。史都華？

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

謝謝，克里斯，大家早安。感謝您今天參加我們第四季的電話會議。我將首先概述最近的發展情況，然後布魯斯將詳細介紹我們的財務表現。

First and foremost, we recently announced a significant transaction to unlock value for our shareholders. While the company has made great strides over the past few years, recovering from the Toys "R" Us bankruptcy, Chinese tariffs and the COVID-19 pandemic, recent supply chain constraints have proven extremely difficult for a company our size to maneuver. The added cost for shipping and logistics, increased lead times and in tandem, higher working capital requirements have certainly impacted our performance. The team and I have worked tirelessly to manage through these challenges and get our product to market.

首先，我們最近宣布了一項重大交易，旨在為股東釋放價值。儘管該公司在過去幾年中取得了長足進步，從玩具反斗城破產、中國關稅和新冠肺炎疫情的影響中恢復過來，但事實證明，最近的供應鏈限制對於我們這樣規模的公司來說極其難以應對。運輸和物流成本的增加、交貨時間的增加以及隨之而來的更高的營運資本需求無疑影響了我們的績效。我和團隊不懈地努力克服這些挑戰，並將我們的產品推向市場。

But in line with our fiduciary responsibility, we, as a Board, saw a great benefit in merging SUMR with a larger, stronger global organization. Closing is expected sometime in the second quarter, and we will work hand-in-hand with the Kids2 team to prepare for the advantageable integration while positioning SUMR for success.

但根據我們的受託責任，作為董事會，我們認為將 SUMR 與更大、更強的全球組織合併會帶來巨大的好處。預計該交易將在第二季的某個時候完成，我們將與 Kids2 團隊攜手合作，為有利的整合做好準備，同時為 SUMR 的成功做好準備。

Regarding our quarter 4 operating performance, let me summarize the major factors that impacted our results. As with last quarter, the company faced continued headwinds caused by supply chain issues across the globe, severely limiting our ability to get product to market on time. And concurrently driving up costs due to added freight, logistics, demurrage and other factors. Such expenses, along with higher overall material costs, greatly reduced gross margins, which fell to almost 20% during the quarter.

關於我們第四季的營運業績，讓我總結一下影響我們業績的主要因素。與上個季度一樣，公司面臨由全球供應鏈問題引起的持續阻力，嚴重限制了我們按時將產品推向市場的能力。同時也因增加運費、物流費、滯期費等因素而推高成本。這些費用加上更高的整體材料成本大大降低了毛利率，本季毛利率下降至近 20%。

While we were successful in continuing to shift to direct import selling, this was not enough to offset overall margin pressure and the difficulty getting product to market through our regular brick-and-mortar channels. It's a credit to our staff and our brands that many categories grew year-over-year, including potties, bathers, strollers and boosters with Amazon revenue up more than 30%.

雖然我們成功地繼續轉向直接進口銷售，但這不足以抵消整體利潤壓力和透過常規實體管道將產品推向市場的困難。許多品類都實現了同比增長，其中包括便盆、沐浴器、嬰兒車和助推器，亞馬遜的收入增長了 30% 以上，這要歸功於我們的員工和品牌。

Presently, as we near the end of the first quarter, things remain a mixed bag. Our products remain in demand, but due to continued supply chain disruptions and delays it is very hard to have the kind of visibility we'd like in terms of purchasing and long-term planning. This obviously impacts our ability to use capital efficiently as we need to purchase inventory with longer lead times. This has, all, clearly stretched working capital requirements, and I am thankful to our bank group as well as Wynnefield for providing the flexibility required during such unusual times.

目前，第一季即將結束，但情況仍然好壞參半。我們的產品仍然有需求，但由於供應鏈持續中斷和延遲，在採購和長期規劃方面很難獲得我們想要的那種可見度。這顯然影響了我們有效利用資本的能力，因為我們需要購買交貨期更長的庫存。這顯然增加了營運資金需求，我感謝我們的銀行集團以及 Wynnefield 在如此特殊時期提供所需的靈活性。

It is with this backdrop that we reported a net loss of $4.8 million or $2.20 per share and adjusted EBITDA of negative $2 million for quarter 4. We remain committed to continuing to manage and grow our operations through these uncharted times. Just as before, we are actively and aggressively working to reduce costs, manage working capital and get product to market. This means working closely with our suppliers, shippers and customers, all with the same goal, getting our brands in the shopping carts of consumers.

在此背景下，我們報告第四季度淨虧損 480 萬美元，即每股 2.20 美元，調整後 EBITDA 為負 200 萬美元。與以前一樣，我們正在積極主動地努力降低成本、管理營運資金並將產品推向市場。這意味著我們要與供應商、托運人和客戶密切合作，共同致力於同一個目標：將我們的品牌放入消費者的購物車中。

We're continuing to raise prices when possible, although it takes time for implementation and the margin recovery that follows. We're also migrating production for certain items to more efficient areas with fewer logistics constraints, costs or bottlenecks. As you can imagine, this is often a moving target. The overall environment continues to be challenging and container rates have remained elevated into quarter 1.

我們會盡可能地繼續提高價格，儘管實施和隨後的利潤恢復需要時間。我們也將某些產品的生產遷移到物流限制、成本或瓶頸較少的更有效率地區。你可以想像，這通常是一個移動的目標。整體環境依然充滿挑戰，貨櫃運價在第一季依然維持高點。

It has been an honor working here at SUMR, and I appreciate all that our team has put into improving the company, its brands, in innovative products. The management team and Board are proud of all that's been accomplished under very difficult and unusual circumstances. At the same time, we wouldn't be here without the steadfast support of Wynnefield and so many of our investors who have stood by us even as we tackled multiple headwinds since my arrival several years ago.

我非常榮幸能在 SUMR 工作，我感謝我們的團隊為改善公司及其品牌和創新產品所做的一切努力。管理團隊和董事會對在非常困難和不尋常的情況下取得的所有成就感到自豪。同時，如果沒有 Wynnefield 和眾多投資者的堅定支持，我們也不會取得今天的成就。

We thank all our shareholders for their patience, passion and interest in our future. We will continue working diligently to position the company for the future as we work to close the deal with Kids2. Please see our SEC filings for additional information about the transaction.

我們感謝所有股東的耐心、熱情和對我們未來的關注。我們將繼續努力工作，為公司的未來做好準備，同時努力完成與 Kids2 的交易。有關該交易的更多信息，請參閱我們的美國證券交易委員會 (SEC) 文件。

With that, I'll turn it over to Bruce to review our financial results in detail. Bruce?

接下來，我將把目光轉向布魯斯，讓他詳細審查我們的財務結果。布魯斯？

Thanks, Stuart, and good morning, everyone. As a reminder, our 10-K and related press release were issued yesterday. In addition to listening to this conference call, I encourage you to review our filings.

謝謝，斯圖爾特，大家早安。提醒一下，我們的 10-K 和相關新聞稿已於昨天發布。除了收聽本次電話會議之外，我還鼓勵您查看我們的文件。

Now to the results. Fourth quarter net sales were $35.3 million compared with $36.0 million in the fourth quarter of fiscal 2020. As Stuart discussed, the company's lower revenue was a result of ongoing supply chain disruptions and inefficiencies, negatively impacting our ability to get product to market. That said, many product categories saw a substantial growth year-over-year, including potties, bathers, strollers and boosters. Sales continued to shift to e-commerce channels during the period with Amazon revenue up over 30% year-over-year.

現在來看看結果。第四季淨銷售額為 3,530 萬美元，而 2020 財年第四季為 3,600 萬美元。儘管如此，許多產品類別仍比去年同期實現了大幅增長，包括便盆、沐浴器、嬰兒車和增高座椅。在此期間，銷售繼續轉向電子商務管道，亞馬遜的營收年增了 30% 以上。

Gross profit was $7.3 million versus $10.8 million in the fourth quarter of 2020, and our gross margin as a percent of sales was 20.6% versus 29.9% last year. The year-over-year margin decline reflects higher transportation and raw material costs, primarily related to supply chain constraints. We are taking steps to improve margins going forward, including raising prices where possible, migrating manufacturing to low-cost locations and enhancing supply chain management processes.

毛利為 730 萬美元，而 2020 年第四季為 1,080 萬美元，毛利率佔銷售額的百分比為 20.6%，而去年同期為 29.9%。利潤率同比下降反映了運輸和原材料成本的上升，這主要與供應鏈限制有關。我們正在採取措施提高未來的利潤率，包括盡可能提高價格、將製造業務遷移到低成本地區以及加強供應鏈管理流程。

Selling expense was $2.8 million in the fourth quarter versus $2.6 million in the prior year period, and as a percentage of net sales was 7.9% this past quarter versus 7.2% in 2020. The increase year-over-year and as a percentage of revenue was primarily due to high freight out costs. General and administration expenses were $7.7 million in the fourth quarter versus $7.6 million in the prior year period. And G&A as a percent of sales was 21.9% this year versus 21.1% in 2020.

第四季銷售費用為 280 萬美元，去年同期為 260 萬美元，佔淨銷售額的百分比為本季的 7.9%，而 2020 年為 7.2%。第四季的一般及行政開支為 770 萬美元，去年同期為 760 萬美元。今年的一般及行政開支佔銷售額的百分比為 21.9%，而 2020 年為 21.1%。

Interest expense was $0.4 million in the fourth quarter of 2021 versus $0.5 million in 2020. The company reported a net loss of $4.8 million or $2.20 per share in the fourth quarter of 2021 compared with a loss of $3.4 million or $1.59 per share in the prior year period. Note that the company recorded a tax provision of $0.6 million in fiscal 2021 fourth quarter, which included a $1.5 million valuation allowance on its deferred tax asset versus a provision of $0.2 million in the comparable period of fiscal 2020. The 2020 fourth quarter also included a $1.8 million debt extinguishment charge related to refinancing the company's credit facilities and a $0.7 million impairment charge associated with dissolving an Israeli subsidiary.

2021 年第四季的利息支出為 40 萬美元，而 2020 年為 50 萬美元。請注意，該公司在 2021 財年第四季記錄了 60 萬美元的稅務準備金，其中包括 150 萬美元的遞延所得稅資產估值準備金，而 2020 財年同期的準備金為 20 萬美元。

Adjusted EBITDA for the fourth quarter of 2021 was negative $2.0 million versus $1.4 million in the fourth quarter of 2020. Adjusted EBITDA in the fourth quarter of 2021 included $1.2 million in bank permitted add-back charges compared with $0.7 million in add-back for the prior year period. Adjusted EBITDA as a percentage of net sales was negative 5.8% in the fourth quarter of fiscal 2021 versus 3.9% last year.

2021 年第四季調整後 EBITDA 為負 200 萬美元，而 2020 年第四季為 140 萬美元。 2021 財年第四季度，調整後 EBITDA 佔淨銷售額的百分比為負 5.8%，去年同期為 3.9%。

Turning to the balance sheet. As of January 1, 2022, Summer Infant had approximately $0.5 million of cash and $40.6 million of bank debt compared with $0.5 million of cash and $30.9 million of bank debt at the beginning of fiscal 2021. After the end of the quarter, in January, the company reached an agreement with Wynnefield Capital, its largest shareholder for a subordinated term loan of up to $5 million, providing additional liquidity and financial flexibility. We drew down $2 million of this in late January.

轉向資產負債表。截至 2022 年 1 月 1 日，Summer Infant 擁有約 50 萬美元現金和 4060 萬美元銀行債務，而 2021 財年年初的現金為 50 萬美元，銀行債務為 3090 萬美元。我們在一月底提取了其中的200萬美元。

Inventory at the end of the fourth quarter was $28.6 million compared with $25.1 million as of January 2, 2021, and our inventory turns were 3.9 turns versus 4.0 turns at the beginning of the 2021 fiscal year. Trade receivables as of January 1, 2022, were $30.9 million compared with $26.0 million at the beginning of fiscal 2021. Days sales outstanding, or DSOs, were 79 as compared to 66 at the start of last year.

第四季末的庫存為 2,860 萬美元，而截至 2021 年 1 月 2 日的庫存為 2,510 萬美元，我們的庫存週轉率為 3.9 次，而 2021 財年初的庫存週轉率為 4.0 次。截至 2022 年 1 月 1 日的貿易應收帳款為 3,090 萬美元，而 2021 財年初為 2,600 萬美元。

Accounts payable and accrued expenses were $33.7 million as of January 1, 2022, compared with $34.1 million at the beginning of the fiscal year. In addition, as disclosed in its Form 10-K for the year ended January 1, 2022, the report of the company's independent auditors on Summer's financial statements as of January 1, 2022, includes a going concern matter of emphasis.

截至 2022 年 1 月 1 日，應付帳款及應計費用為 3,370 萬美元，而財年初為 3,410 萬美元。此外，正如其截至 2022 年 1 月 1 日止年度的 10-K 表中所披露的那樣，公司獨立審計師對 Summer 截至 2022 年 1 月 1 日的財務報表的報告中包含一個持續經營重點事項。

With that, I'll turn the call over to the operator and open it up for questions.

說完這些，我將把電話轉給接線員，並開始回答問題。

(Operator Instructions) Our first question comes from [Rick Smith] with [Smith Capital].

（操作員指示）我們的第一個問題來自 [Smith Capital] 的 [Rick Smith]。

I haven't seen a deal in a while that's contingent upon financing. Can you guys walk us through that? And then also walk us through the new going concern language in the 10-K, please?

我已經有一段時間沒有見過以融資為前提的交易了。你們能給我們講講這個嗎？然後您還能向我們介紹一下 10-K 檔案中新的持續經營語言嗎？

Yes, I'll talk to the contingent and then you can talk to the GC language, Bruce. On the contingent, we're getting ready to file a proxy that will have all the details on the actual agreement that should happen in short order here over the next couple of weeks. And we really need to wait until that's filed, you'll have all the information then.

是的，我會和代表團談談，然後你就可以和 GC 語言交談，布魯斯。在此情況下，我們正準備提交一份代理文件，其中包含有關實際協議的所有細節，該協議將在未來幾週內很快達成。我們確實需要等到文件歸檔之後，您才會獲得所有資訊。

Does that mean it's part of the negotiation?

這是否意味著這是談判的一部分？

Say again?

再說一遍嗎？

Does that mean it was part of the negotiation?

這是否意味著這是談判的一部分？

Well, yes. We announced that right in there that it was contingent on that. So it was part of what we negotiated. Correct.

嗯，是的。我們當時就宣布了這一點，這取決於這一點。所以這是我們談判的一部分。正確的。

Yes. And as it relates to the going concern, look, generally accepted accounting principles requires that you go through certain analyses such as trends, recent losses being incurred, et cetera, et cetera. And upon reviewing that criteria, it was decided that we would have a going concern opinion.

是的。就持續經營而言，公認會計原則要求你進行某些分析，例如趨勢、最近發生的損失等等。在審查了該標準後，我們決定發表持續經營意見。

Well, how does that differ from last year? Was it just a technicality because of the financials?

那麼，這與去年有何不同？這僅僅是因為財務原因而產生的技術問題嗎？

It's just an interpretation of the technical language that we need to go through.

這只是我們需要經歷的技術語言的一種解釋。

(Operator Instructions) At this time, there seems to be no further callers in the queue. I would now like to turn it over to Stuart Noyes for any closing remarks.

（操作員指示）目前，佇列中似乎沒有其他呼叫者。現在我想將發言權交給史都華‧諾伊斯，請他做最後發言。

Great. Thank you very much for everybody joining our call today. Have a nice afternoon.

偉大的。非常感謝大家今天參加我們的電話會議。祝您下午愉快。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。