Summer Infant profit rises 41.47%

WOONSOCKET – Summer Infant Inc. (Nasdaq: SUMR, SUMRW) posted a record profit of $4.90 million for 2008, an increase of 41.47 percent from 2007’s $3.46 million, on annual revenue that rose 64.40 percent to $132.37 million. Earnings per diluted share rose to 33 cents from the year-ago 26 cents.
Meanwhile, the infant and toddler product manufacturer’s core Summer Operating Companies – excluding Summer Infant’s March 31 acquisition of Basic Comfort Inc., a Denver-based maker of baby sleep positioners and other infant accessories (READ MORE); and its April 18 acquisition of Kiddopotamus & Co., a Stilwell, Kan.-based maker of nursery, travel and feeding accessories including the SwaddleMe and HuggaCub infant blankets (READ MORE) – saw “organic” revenue growth of about 41 percent to $138.3 million, the company said.
“We are very pleased with our strong financial performance in 2008, as we generated organic revenue growth of 41 percent despite the challenging macroeconomic environment,” Chairman, President and CEO Jason P. Macari said this evening in the after-market report.
Full-year revenue “exceeded the high end of the pro forma guidance range that we issued on our first-quarter earnings call following our two acquisitions,” Macari said, “continuing to demonstrate the strength of the Summer Infant brand, the value proposition of our products and the solid execution of our growth strategy. In addition, despite facing higher commodity and input cost headwinds, we were able to meet our pro-forma EBITDA [earnings before interest, taxation, depreciation and amortization] and EPS guidance for the year.”
For the three months ended Dec. 31, Summer Infant posted a profit of $966,000 – a 29.66 percent increase from the year-ago $745,000 (READ MORE) – on net revenue that grew 46.49 percent to $34.39 million. Earnings per diluted share rose to 6 cents from the 2007 fourth quarter’s 5 cents.
Besides its 2008 acquisitions, Summer Infant credited new product introductions and the addition of new customers. Gross margins, however, “were negatively impacted year over year” by higher resin costs for U.S.-made products and higher costs for goods made in China, “although costs have recently stabilized due to lower commodity prices,” the company said.
“We continue to focus on cost-cutting measures in all areas … and identifying ways to streamline our business without sacrificing the quality of our products or the service we provide,” Macari stressed. “We expect gross margins to benefit from re-engineering products, favorable negotiations with vendors and lower commodity costs, which will begin to positively impact margins by the second quarter.”
Like many other companies this earnings season, Summer Infant declined to provide earnings projections for the year ahead. “Given the lack of visibility in consumer spending and recent volatility in ordering rates over the past several months, we are refraining from issuing full-year guidance at this time,” Macari said.
But the CEO did provide rough guidance for the current calendar quarter. “We have seen a solid increase in point-of-sale data over the past two months, relative to the fourth quarter. The improvement in point-of-sale data has led to increased orders from our customers in February and March,” he reported. “However, shipments in January were relatively light, due to the sharp reduction of inventory levels at our major retail customers … Based on these early 2009 results, we expect our first-quarter revenue and earnings to be flat to slightly down relative to the fourth quarter,” Macari said.
“Looking ahead,” he added, “our 2009 product lineup has been performing well at the retail level and we are encouraged by the solid momentum in current ordering rates. … We continue to believe that the value and quality of Summer Infant products will support customer demand in 2009 and that the infant health, safety and wellness category remains relatively non-discretionary.”
Summer Infant Inc. (Nasdaq: SUMR, SUMRW) designs and makes audio-video monitors, safety gates, bed rails, infant thermometers, booster and potty seats and other products for toddler and infants. Additional information is available at www.SummerInfant.com.