Shares of Summer Infant, Inc. (NASDAQ:SUMR) Take a Hit Following Reporting of Third Quarter Results

Global leader of premium infant and juvenile products, Summer Infant, Inc. (NASDAQ:SUMR), announces financial results for fiscal Q3, 2016.

WOONSOCKET, R.I., Nov. 02, 2016 (GLOBE NEWSWIRE) — Summer Infant, Inc. (“Summer Infant” or the “Company”) (SUMR), a global leader in premium infant and juvenile products, today announced financial results for the fiscal third quarter ended October 1, 2016.

“Summer Infant’s third quarter played out largely as expected, with strong underlying operating performance – including earnings of $0.01 per share – even as revenue was flat year-over-year,” said Mark Messner, President and CEO. “Our gross margins remain on track, G&A expenses fell 25% versus 2015, and sound working capital management left our inventory at the lowest level in recent memory – down 26% from this time last year. Our balance sheet is in the best shape we’ve seen in many quarters, and the Company is well positioned for improved bottom line results going forward.

“At the same time, we are focusing on initiatives to better utilize our intellectual property to drive further brand recognition and channel development. As part of this effort, certain core products, including RF monitors, are being overhauled to increase consumer acceptance at a variety of price points, while we also work to strengthen the Company’s bond with retailers through tailored promotional strategies and less reliance on third-party wholesalers. The steps we are taking today, we believe, will set the stage for higher growth, margin expansion, and increased brand loyalty in 2017 and beyond.”

Third Quarter Results

Net sales for the three months ended October 1, 2016 were $48.6 million compared with $50.2 million for the three months ended October 3, 2015. Excluding $1.7 million of sales related to the Company’s bank-approved inventory reduction plan and furniture exit in 2015, revenue was relatively flat year-over-year. The three months ended October 1, 2016 also included $0.5 million of unfavorable foreign exchange on a constant currency basis, primarily due to the decline in the value of the British pound.

Gross profit for the third quarter of 2016 was $15.5 million compared with $15.6 million for the third quarter of 2015, and gross margin was 32.0% in 2016 versus 31.1% in the prior-year period. The three months ended October 1, 2016 included $0.1 million of unfavorable foreign exchange on a constant currency basis, primarily due to the decline in the value of the British pound, and $0.3 million in cost overages for certain product introductions, without which gross margin would have been 32.5%. The fiscal 2015 third quarter included $0.1 million in losses on the sale of inventory below cost (related to the aforementioned inventory reduction plan), $0.2 million of inventory charges tied to exiting the furniture business, and $0.3 million in temporary costs related to a West Coast distribution center; excluding such items, gross margin for the three months ending October 3, 2015 would have been 33.0%.

Selling expenses were $3.7 million in the third quarter of 2016 compared with $4.1 million in the third quarter of 2015. General and administrative expenses (G&A) were $9.7 million in 2016 versus $13.0 million last year – a decline of 25%; the third quarter of 2016 included $0.1 million of legal expenses versus $3.7 million in the third quarter of 2015. G&A as a percent of sales fell to 20.0% in 2016 from 25.8% last year. Interest expense was $0.6 million in the third quarter of 2016, flat with 2015.

The Company reported net income of $0.2 million, or $0.01 per share, in the third quarter of 2016 compared with a net loss of $1.8 million, or $(0.10) per share, in the third quarter of 2015. Adjusted EBITDA for the third quarter of 2016 was $2.6 million versus $3.1 million for the third quarter of 2015. Adjusted EBITDA in the third quarter of 2016 includes $0.3 million in bank permitted add-back charges compared with $4.3 million in the prior-year period (including the aforementioned $3.7 million of litigation expenses).

Adjusted EBITDA is a non-GAAP metric.  Adjusted EBITDA excludes various items that are detailed in the financial tables and accompanying footnotes reconciling GAAP to non-GAAP results contained in this release. An explanation of these measures also is included under the heading below “Use of Non-GAAP Financial Information.”

Original Source

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Summer Infant, Inc. (NASDAQ:SUMR) shares are trading -12.32% on the news and in the range of $1.65 – 2.03 during the current trading session.  When taking a look at which direction the stock might be headed, investors often look to brokerage analysts who cover the stock.  Sell-side research firms on Wall Street currently have a consensus one-year price target of $2.50 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.

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Sell-side analysts are projecting earnings per share of $0.03 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $0.15 per share according to First Call.

In looking at where the stock is trading on a technical level, the stock is trading -15.75% away from its 50-day moving average of $2.11.  Based on the most recent available data, the equity is -27.05% off of its 52-week high of $2.44 and +45.90% away from its 52-week low which is $1.22.

This is a crucial indicator investors watch as higher ratios compared to peers, would suggest higher future earnings growth potential for the stock.  The price to current year EPS estimates from research analysts currently stands at 11.87.  In looking further ahead, potential investors should note that the company’s price to next year’s EPS estimates is $8.09.

Today, the stock opened at $2.03 and the last bid at the time of writing stood at $1.78.  During the session thus far, the equity dipped down to $1.65 and touched $2.03 as the high point.  Summer Infant, Inc. (NASDAQ:SUMR) has a market cap of $32.84M and has seen an average daily volume of 27,589 over the past three months.

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Disclaimer: Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

 

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