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Sumr investor presentation dec 2015

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Confidential Information Summer Infant -- Do Not Distribute Summer Infant – Investor Presentation December 2015
Transcript

Confidential Information Summer Infant -- Do Not Distribute

Summer Infant – Investor Presentation

December 2015

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 3, 2015, 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

• 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

• Exiting poorly performing products / licensing arrangements

• Focus on high-margin categories and effective pricing strategies

3

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 Strong Brands 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

Product Priorities

Monitors Expansion

Social Engagement

Content

Apps & Software

Expansion

Monitor

Nursery

Feeding

Safety

On-the-Go

Demonstrated Strength in New Product Development

Monitors

WiFi Video

Monitor

SwaddleMeExpanded Shelf

Space

Refreshed branding

Safety

Pop ‘N Play

Gear 3D Lite Strollers

2015 Opportunity

New Feeding System

Expanded Stroller line

5

Focused Brand StrategyInnovative New Products

Unique Positioning

to Meet Moms Needs

Brand

Continue to strengthen Continue to strengthen

Focused Growth Opportunity

Little Me / SwaddleMe Co-branded swaddle blankets

Available Mid-2015

*Dates for availability are subject to change

Focused Growth Opportunity

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

6

Summer Smart Environment

7

Smart Wifi Video Monitor

Summer Smart™ is a collection of products that will provide beneficial information and insights about baby’s development and well-being.

All Summer Smart™ products work independently or in concert through the Summer Smart™ APP. The more you add, the more you know.

Simple Sync ™technology allows for one simple touch on the Dedicated Device to “sync” any new Summer Smart ™ product to the Environment

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

• Goal of new product introductions each year representing at least 20% of annual revenue

Focus on Core Brands & Channel Diversification

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

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.

9

*various sources and Company data

Email Blast to our Summer

Circle Subscribers

Expanding Digital Strategy

Video content for use on social, owned website & retailer sites

Sweepstakes shared across social media and website

Seeding & support for

Online Reviews

10

Turnaround in Progress

• Focus on Brands

• Streamlined product portfolio

• Exited non-core areas & licensing agreements

• Restructured credit facilities

• Gross margin improvement

• Target new markets

• Further expand margins

• Reduce inventory

• Drive cash flow

• Pay down debt

• Leverage G&A structure

Recent Successes

2015 Path to Success

11

Recent Financials

Core Product Sales Growth Year/Year12

October 3, 2015 September 30, 2014 October 3, 2015 September 30, 2014

Net sales 50,205$ 51,020$ 155,025$ 154,390$

Cost of goods sold 34,600 34,420 108,674 103,897

Gross profit 15,605$ 16,600$ 46,351$ 50,493$

General and administrative expenses 12,953 10,107 35,235 29,503

Selling expense 4,119 4,456 13,295 13,742

Depreciation and amortization 1,275 1,369 3,927 4,132

Operating (loss) income (2,742)$ 668$ (6,106)$ 3,116$

Interest expense 589 870 2,753 2,571

(Loss)/income before taxes (3,331)$ (202)$ (8,859)$ 545$

Income tax (benefit)/expense (1,500) (64) (3,313) 179

Net (loss)/income (1,831)$ (138)$ (5,546)$ 366$

(Loss)/income per diluted share (0.10)$ (0.01)$ (0.30)$ 0.02$

Shares used in fully diluted EPS 18,309,381 18,086,441 18,239,490 18,196,470

Nine Months EndedThree Months Ended

Balance Sheet

Recently Restructured Debt,

Inventory Reduction Efforts Underway 13

October 3, 2015 January 3, 2015

(unaudited)

Cash and cash equivalents 1,104$ 1,272$

Trade receivables, net 36,057 38,794

Inventory, net 43,622 44,010

Property and equipment, net 11,890 13,080

Other intangible assets, net 20,326 20,679

Other assets 4,533 4,632

Total assets 117,532$ 122,467$

Accounts payable 31,818$ 21,878$

Accrued expenses 4,756 8,628

Current portion of long-term debt 2,089 1,641

Long term debt, less current portion 51,436 57,097

Other long term liabilities 2,726 2,994

Deferred tax l iabilities 2,418 2,378

Total liabil ities 95,243$ 94,616$

Total stockholders’ equity 22,289 27,851

Total l iabil ities and stockholders’ equity 117,532$ 122,467$

Adjusted EBITDA & EPS Reconciliation

14

October 3, 2015 September 30, 2014 October 3, 2015 September 30, 2014

Reconciliation of Non-GAAP EBITDA

Net (loss)/income (1,831)$ (138)$ (5,546)$ 366$

Plus: interest expense 589 870 2,753 2,571

Plus: (benefit)/expense for income taxes (1,500) (64) (3,313) 179

Plus: depreciation and amortization 1,275 1,369 3,927 4,132

Plus: non-cash stock based compensation expense 280 468 700 1,011

Plus: permitted add-backs 4,324 1,097 9,339 2,455

Adjusted EBITDA 3,137$ 3,602$ 7,860$ 10,714$

Reconciliation of Adjusted EPS

Net (loss) Income (1,831)$ (138)$ (5,546) 366

Plus: permitted add-backs 2,378 749 5,846 1,648

Plus: unamortized financing costs - -$ 428 -

Adjusted net income 547$ 611$ 728$ 2,014$

Adjusted earnings per diluted share 0.03$ 0.03$ 0.04$ 0.11$

Nine Months EndedThree Months Ended

Senior Leadership Team

Bob Stebenne 30+ Years ExperienceCEO, President and Chief Operating Officer Adept at increasing business profitability

Bill Mote 20+ Years ExperienceChief Financial Officer Deep global financial acumen

Ted Kelley 25+ Years Experience Senior Vice President of Sales Extensive Juvenile Industry experience

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

Dan Almagor 30+ Years ExperienceExecutive Chairman Established turnaround - global leadership

15

• Experienced & Focused

Management Team

• Leading Designer & Supplier

of Juvenile Products

• Strong Well-Known Brands

• Positive Industry Dynamics

• Focus on Core Strengths: NPD,

Monitors, Safety, Nursery

• Targeted Growth Categories:

Gear, Feeding

• 2015 Focused on Earnings &

Balance Sheet Improvement

Investor Highlights

16

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.” In other words, the definition should

match what you presented on slide 13.

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.

Use of Non-GAAP Financial Metrics

17

Thank you 18


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