Summer Infant, Inc.

Good morning, ladies and gentlemen, and welcome to the Summer Brands' fourth quarter conference call. At this time, all participants are now in listening mode. Following management's prepared remarks, we'll hold a Q&A session. To ask a question, please press star followed by one on your touch-tone phone. If anyone has difficulty hearing the conference, please press star zero for operator assistance. As a reminder, this conference is being recorded today. March 17, 2022. I would now like to turn to Chris Witte, Investor Relations Advisor. Please go ahead.

Hello, and welcome to the Summer Brands 2021 fourth quarter conference call. With me on the call today is the company's CEO, Stuart Noyes, and interim CFO, Bruce Meyer. I would now like to provide a brief safe harbor statement. This call may include four looking statements that relate to Summer Brands outlook for 2022 and beyond, and the pending transaction with kids, too. These forward-looking statements are subject to various risks and uncertainties that could cause actual results and events to differ materially from these statements. Please refer to the risk factors contained in the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and in our other filings with the SEC. During the call, management may make references to adjusted EBITDA, adjusted net income, and adjusted earnings per share. These metrics are non-GAAP financial measures, which the company believes help investors gain a meaningful understanding of changes in summer brands' operations. For more information on non-GAAP financial measures, please see the table for a reconciliation of GAAP results to non-GAAP measures, included in the company's financial release issued yesterday evening. And with that, I'd like to turn the call over to Stuart Noyes. Stuart?

Thanks, Chris, and good morning, everyone. We appreciate you joining our fourth quarter conference call today. I'll start by providing an overview of recent developments, after which Bruce will go through our financial results in detail. First and foremost, we recently announced a significant transaction to unlock value for our shareholders. While the company has made great strides over the past few years, recovering from the Toys R Us bankruptcy, Chinese tariffs and the COVID-19 pandemic, recent supply chain constraints have proven extremely difficult for a company our size to maneuver. The added costs for shipping and logistics, increased lead times, and in tandem, higher working capital requirements have certainly impacted our performance. The team and I have worked tirelessly to manage through these challenges and get our product to market. But in line with our fiduciary responsibility, we as a board saw a great benefit in merging summer with a larger, stronger global organization. Closing is expected sometime in the second quarter, and we will work hand in hand with the Kids 2 team to prepare for the eventual integration while positioning summer for success. Regarding our quarter four operating performance, let me summarize the major factors that impacted our results. As with last quarter, the company faced continued headwinds caused by supply chain issues across the globe, severely limiting our ability to get product to market on time, and concurrently driving up costs due to added freight, logistics, demurrage, and other factors. Such expenses, along with higher overall material costs, greatly reduced gross margins, which fell to almost 20% during the quarter. While we were successful in continuing to shift to direct import selling, this was not enough to offset overall margin pressure and the difficulty getting product to market through our regular brick-and-mortar channels. It's a credit to our staff and our brands that many categories grew year over year, including potties, bathers, strollers, and boosters, with Amazon revenue up more than 30%. Presently, as we near the end of the first quarter, things remain a mixed bag. Our products remain in demand, but due to continued supply chain disruptions and delays, it is very hard to have the kind of visibility we'd like in terms of purchasing and long-term planning. This obviously impacts our ability to use capital efficiently as we need to purchase inventory with longer lead times. This has all clearly stretched working capital requirements, and I'm thankful to our bank group as well as Winfield for providing the flexibility required during such unusual times. It is with this backdrop that we reported a net loss of $4.8 million, or $2.20 per share, in adjusted EBITDA of negative $2 million for quarter four. We remain committed to continuing to manage and grow our operations through these uncharted times. Just as before, we are actively and aggressively working to reduce costs, manage working capital, and get product to market. This means working closely with our suppliers, shippers, and customers, all with the same goal, getting our brands in the shopping carts of consumers. We're continuing to raise prices when possible, although it takes time for implementation and the margin recovery that follows. We're also migrating production for certain items to more efficient areas with fewer logistics constraints, costs, or bottlenecks. As you can imagine, this is often a moving target. The overall environment continues to be challenging, and container rates have remained elevated into quarter one. It has been an honor working here at Summer, and I appreciate all that our team has put into improving the company, its brands, and innovative products. The management team and board are proud of all that's been accomplished under very difficult and unusual circumstances. At the same time, we would be here without the steadfast support of Winfield and so many of our investors who have stood by us even as we've tackled multiple headwinds since my arrival several years ago. We thank all our shareholders for their patience, passion, and interest in our future. We will continue working diligently to position the company for the future as we work to close the deal with Kids2. Please see our SEC filings for additional information about the transaction. With that, I'll turn it over to Bruce to review our financial results in detail. Bruce?