Summer Infant, Inc. Reports First Quarter 2012 Results

WOONSOCKET, RI -- (Marketwire) -- 05/14/12 -- Summer Infant, Inc. ("Summer Infant" or the "Company") (NASDAQ: SUMR), a leading developer and distributor of juvenile health, safety, and wellness products, today announced financial results for the first quarter ended March 31, 2012.

First Quarter 2012 Results

Net revenues in the first quarter of 2012 increased 7.8% to $63.0 million from $58.5 million in the first quarter of 2011. Revenue growth was primarily driven by the addition of Born Free which was acquired on March 24, 2011.

Gross profit increased 7.1% to $21.1 million in the first quarter of 2012 from $19.7 million in the first quarter of 2011. Gross margin decreased slightly in the first quarter of 2012 to 33.5%, from a gross margin of 33.7% in the first quarter of 2011.

Selling, general and administrative ("SG&A") expenses were $16.6 million in the first quarter of 2012, compared to $16.1 million in the first quarter of 2011. As a percent of revenues, SG&A was 26.4% in the first quarter of 2012 compared to 27.5% a year ago which reflects a 110 basis point improvement.

Adjusted EBITDA (defined herein as earnings before interest, taxes, depreciation and amortization and non-cash stock-based compensation, and for the first quarter of 2011 only, deal-related fees) was $4.7 million in the first quarter of 2012 compared to $4.4 million on a comparable basis in the first quarter of 2011 which reflects an increase of 6.7%. Adjusted EBITDA margin for the first quarter 2012 was 7.5% compared to 7.6% for the first quarter of 2011.

The Company reported net income of $1.3 million, or $0.07 per diluted share, in the first quarter of 2012, compared to $1.2 million, or $0.07 per diluted share, in the first quarter of 2011. The company recorded a tax expense of $0.5 million in the first quarter of 2012 versus $0.4 million in the first quarter of 2011. The company's effective tax rate has increased in 2012 to 29.0% from approximately 24.0% in 2011.

Jason Macari, Chairman and Chief Executive Officer of Summer Infant, commented, "We are pleased with the improved product placement we received at the start of this year. Our increased retail presence is helping to broaden awareness of our brands and product portfolio while at the same time further reducing the concentration of our distribution. The initial sell-through of our core product lines and categories was encouraging. However, as the first quarter progressed, the retail environment became more challenging which led to a greater degree of promotional activity than we expected."

Balance Sheet

As of March 31, 2012, the Company had approximately $1.7 million of cash and $69.3 million of debt for a net debt balance of $67.6 million, compared to $62.0 million as of December 31, 2011. The increase in debt versus year-end reflects borrowings for working capital purposes.

Loan Agreement

The Company also announced that it recently reached an amended loan agreement with its lenders. The amendment reset certain financial covenants and extended the maturity date to December 31, 2013 from June 30, 2013. This Amendment provides the Company the necessary access to working capital to support its growth plans and extends the term six months thereby allowing the Company added time to reach a longer term financing agreement with its lenders.

Mr. Macari concluded, "We are committed to leveraging our strengths in safety and innovation in order to establish leadership positions in each of our product categories. While the second quarter will remain challenging due to a heightened promotional environment, we are confident that we have a sound plan in place to achieve our goals. Over the next few months we are introducing our revolutionary PEEK™ Monitoring System and re-launching our award winning PRODIGY™ Car Seat and Travel System.