Based in Woonsocket Rhode Island SUMMER INFANT INC. is a designer marketer and distributor of branded durable juvenile health safety and wellness products (for ages upto three years) which are sold principally to large U.S. retailers. The Company currently sells proprietary products in a number of different categories including nursery audio/video monitors safety gates durable bath products bed rails infant thermometers and related nursery health and safety products booster and potty seats soft goods bouncers strollers travel accessories highchairs and swings. Summer Infant Inc. has a market cap of $33.1 million; its shares were traded at around $2.1499 with a P/E ratio of 6.5 and P/S ratio of 0.2. Highlight of Business Operations: Net sales increased 22.6% from approximately $28,425,000 for the three months ended March 31, 2008 to approximately $34,849,000 for the three months ended March 31, 2009. This sales increase was primarily attributable to increased distribution of Summers products throughout Summers customer base, the acquisition of Basic Comfort and Kiddopotomus in 2008, and new product introductions. Significant increases were noted in large accounts such as Babies R Us, in addition to several other accounts which have been added over the past few years, including Lowes and Wal-Mart.
Gross profit increased 17% from approximately $9,935,000 for the three months ended March 31, 2008 to approximately $11,657,000 for the three months ended March 31, 2009. The gross profit as a percentage of sales decreased to 33.4% from 35.0% in the prior year. The decrease as a percentage of sales is primarily due to increased costs of finished goods from the Companys vendors in Asia and the US. The increase in these costs is primarily due to increased raw material costs and labor. The Company also sold approximately $1,000,000 of excess inventory at reduced prices in the three months ended March 31, 2009.
EBITDA decreased from approximately $2,609,000 for the three months ended March 31, 2008 to approximately $2,363,000 for the three months ended March 31, 2009, a decrease of 9%. This decrease was primarily attributable to the lower gross profit percentage as described above.
For the three months ended March 31, 2009, net cash used in operating activities was $1,488,000. This was primarily due to increases in trade receivables of $3,209,000 and a decrease in accounts payable of $4,268,000 offset by a decrease in inventory of $3,808,000, which is a direct result of the significant increase in sales for the Company. Total sales were over $34,800,000 for the three months ended March 31, 2009, which represents a 23% increase over the sales in the first three months of the prior year. See detailed discussion of the working capital cycle of Summer above.
Based on the above factors, the net cash decrease for the three months ended March 31, 2009 was $176,000, resulting in a cash balance of $812,000 at March 31, 2009.
On April 10, 2008, Summer entered into two new three-year secured credit facilities (the Loan Agreement) with Bank of America, N.A., as Administrative Agent, and each of the financial institutions a signatory to the Loan Agreement. The Loan Agreement provides for a $36,000,000 working capital revolving credit facility and a $10,000,000 non-restoring acquisition credit facility. The new credit facilities mature on June 30, 2011.
Read the The complete Report