SUMR Brands Reports Third Quarter Results Nasdaq:SUMR

WOONSOCKET, R.I., Nov. 10, 2020 (GLOBE NEWSWIRE) — SUMR Brands (“SUMR Brands” or the “Company”) (NASDAQ: SUMR), a global leader in premium infant and juvenile products, today announced financial results for the third quarter ended September 26, 2020.

Recent Highlights

• SUMR Brands reported net sales of $40.7 million in the third quarter versus $41.5 million in the prior-year period, reflecting higher demand across many of the Company’s core product categories largely offsetting the impact from COVID-19 on certain brick & mortar customers and international sales
• Net income was $2.2 million, or $1.03 per share, in the third quarter of 2020 compared with a net loss of $1.7 million, or $(0.79) per share, in the prior-year period; the 2020 third quarter was favorably impacted by $0.17 per share related to a modification of interest expense deductibility under the U.S. Cares Act, resulting in a tax benefit
• Adjusted EBITDA rose to $4.7 million from $0.8 million in the third quarter of 2019, and Adjusted EBITDA as a percent of net sales was 11.4% in 2020 versus 2.0% last year
• G&A declined to $6.9 million in the quarter from $8.4 million in last year’s comparable period
• The Company announced October 16 that it had successfully refinanced its debt facilities with Bank of America, with annualized interest expense expected to be reduced by approximately $2.0 million

“After a very positive second quarter, we continued to strengthen the Company and build a foundation for long-term success this period,” said Stuart Noyes, Interim CEO. “Excluding one-time adjustments related to the Cares Act, we posted adjusted earnings of $0.86 per share and Adjusted EBITDA of $4.7 million despite a slight decline in third quarter revenue due to ongoing COVID-19 headwinds, a strategic move to direct import select products, and our international restructuring. We focused on mitigating the impact of the reinstatement of certain tariffs this quarter by actively managing costs, maintaining price discipline, and working to improve supply chain inefficiencies. Such steps have been pivotal heading into the final quarter of the year as we expect that softening consumer demand, additional challenges anticipated due to COVID-19 resurgence, and further disruptions to our supply chain will dampen top line results and impact margins. At this point we anticipate Adjusted EBITDA may be 40%-60% lower in the fourth quarter than in the third, as SUMR – and other companies – deal with unusual levels of shipping congestion, container shortages, lack of trucks, and other issues impacting inventory, our cost structure, and time to market.

“In October we announced the completion of a favorable debt refinancing with Bank of America, a significant accomplishment for SUMR. Our improved financial position this year allowed us to structure a less expensive credit agreement that we expect will reduce interest expense by approximately $2.0 million annually. We will continue to focus on using cash flow to de-lever the balance sheet, whenever possible, while investing in e-commerce initiatives and core product categories that fuel top line growth. We are pleased with how far the Company has come in 2020 and are focused on successfully meeting the challenges ahead – in the fourth quarter and beyond.”

Third Quarter Results

Net sales for the three months ended September 26, 2020 were $40.7 million compared with $41.5 million for the three months ended September 28, 2019. The Company’s results reflect increased revenue across many key product segments – including gates, potties, bathers, and playards – offset by lower international sales and the lingering impact of COVID-19 on certain brick & mortar retailers and product supply.

Gross profit for the third quarter of 2020 was $13.5 million versus $12.6 million in 2019, while gross margin rose to 33.3% in 2020 versus 30.3% last year. The gross margin increase reflected a favorable mix of higher-margin…