Superior Group of Companies, Inc. (NASDAQ: SGC) (the “Company”), today announced its third quarter 2024 results.

“We grew our sales and profit both sequentially from the prior quarter and year over year, representing our strongest quarterly results of 2024 despite only modest improvement in macro-related customer sentiment,” said Michael Benstock, Chief Executive Officer. “We also continue to drive solid operating cash flow as our entire team is focused on driving sales by leveraging our ongoing growth-oriented investments in people, products and technology, while striving to further optimize efficiencies and margins.  Today we are reaffirming our full-year outlook and are pleased to report that our Board has again approved a quarterly dividend.  Superior Group of Companies is as energized as ever by our multitude of opportunities to gain market share across the attractive end markets we serve in our quest to further enhance long-term shareholder value.”

Third Quarter Results

For the third quarter ended September 30, 2024, net sales increased 10.0% to $149.7 million compared to third quarter 2023 net sales of $136.1 million. Pretax income increased to $6.6 million compared to $3.3 million in the third quarter of 2023. Net income increased to $5.4 million or $0.33 per diluted share compared to $3.1 million or $0.19 per diluted share for the third quarter of 2023.

Fourth Quarter 2024 Dividend

The Board of Directors declared a quarterly dividend of $0.14 per share, payable November 27, 2024 to shareholders of record as of November 13, 2024.

2024 Full-Year Outlook

The Company is maintaining its full year 2024 sales outlook range of $563 million to $570 million, versus 2023 sales of $543 million, and maintaining its full-year earnings per diluted share forecast of $0.73 to $0.79 versus $0.54 in 2023.

Webcast and Conference Call

The Company will host a webcast and conference call at 5:00 pm Eastern Time today. The live webcast and archived replay can be accessed in the investor relations section of the Company's website at https://ir.superiorgroupofcompanies.com/Presentations. Interested individuals may also join the teleconference by dialing 1-844-861-5505 for U.S. dialers and 1-412-317-6586 for International dialers. The Canadian Toll-Free number is 1-866-605-3852. Please ask to be joined to the Superior Group of Companies call. A telephone replay of the teleconference will be available through November 20, 2024. To access the replay, dial 1-877-344-7529 in the United States or 1-412-317-0088 from international locations. Canadian dialers can access the replay at 855-669-9658. Please reference conference number 5346270 for replay access.

The Company’s website at https://ir.superiorgroupofcompanies.com/Presentations will also contain an updated investor presentation.

Disclosure Regarding Forward Looking Statements

Certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified by use of the words “may,” “will,” “should,” “could,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “potential,” or “plan” or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements in this press release may include, without limitation: (1) projections of revenue, income, and other items relating to our financial position and results of operations, including short term and long term plans for cash, (2) statements of our plans, objectives, strategies, goals and intentions, (3) statements regarding the capabilities, capacities, market position and expected development of our business operations and (4) statements of expected industry and general economic trends.

Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results. Such risks and uncertainties include, but are not limited to, the following: the impact of competition; uncertainties related to supply disruptions, inflationary environment (including with respect to the cost of finished goods and raw materials and shipping costs), employment levels (including labor shortages), and general economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America (“U.S.” or “United States”) in which the Company’s customers are located; changes in the healthcare, retail chain, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of raw materials; attracting and retaining senior management and key personnel; the effect of the Company’s previously disclosed material weakness in internal control over financial reporting; the Company’s ability to successfully remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting; and other factors described in the Company’s filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as may be required by law.

About Superior Group of Companies, Inc. (SGC):Established in 1920, Superior Group of Companies is comprised of three attractive business segments each serving large, fragmented and growing addressable markets. Across Healthcare Apparel, Branded Products and Contact Centers, each segment enables businesses to create extraordinary brand engagement experiences for their customers and employees. SGC’s commitment to service, quality, advanced technology, and omnichannel commerce provides unparalleled competitive advantages. We are committed to enhancing shareholder value by continuing to pursue a combination of organic growth and strategic acquisitions. For more information, visit www.superiorgroupofcompanies.com.

Investor Relations Contact:Investors@Superiorgroupofcompanies.com

    

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except shares and per share data)
 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2024     2023     2024     2023  
Net sales   $ 149,690     $ 136,126     $ 420,268     $ 396,061  
                                 
Costs and expenses:                                
Cost of goods sold     89,144       82,928       253,650       248,159  
Selling and administrative expenses     52,215       47,246       149,339       134,007  
Other periodic pension costs     189       214       567       642  
Interest expense     1,569       2,464       4,897       7,658  
      143,117       132,852       408,453       390,466  
Income before income tax expense     6,573       3,274       11,815       5,595  
Income tax expense     1,170       160       1,900       380  
Net income   $ 5,403     $ 3,114     $ 9,915     $ 5,215  
                                 
Net income per share:                                
Basic   $ 0.34     $ 0.19     $ 0.62     $ 0.33  
Diluted   $ 0.33     $ 0.19     $ 0.60     $ 0.32  
                                 
Weighted average shares outstanding during the period:                                
Basic     16,107,549       15,992,792       16,118,885       15,954,264  
Diluted     16,543,990       16,155,355       16,588,914       16,132,832  
                                 
Cash dividends per common share   $ 0.14     $ 0.14     $ 0.42     $ 0.42  
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except shares and par value data)
 
    September 30,     December 31,  
    2024     2023  
    (Unaudited)          
ASSETS                
Current assets:                
Cash and cash equivalents   $ 18,373     $ 19,896  
Accounts receivable, less allowance for doubtful accounts of $3,836 and $4,237, respectively     98,822       103,494  
Inventories     93,771       98,067  
Contract assets     50,326       48,715  
Prepaid expenses and other current assets     10,177       9,188  
Total current assets     271,469       279,360  
Property, plant and equipment, net     42,859       46,890  
Operating lease right-of-use assets     16,282       17,909  
Deferred tax asset     12,333       12,356  
Intangible assets, net     47,959       51,160  
Other assets     16,448       14,775  
Total assets   $ 407,350     $ 422,450  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 46,292     $ 50,520  
Other current liabilities     42,381       43,978  
Current portion of long-term debt     5,625       4,688  
Current portion of acquisition-related contingent liabilities     740       1,403  
Total current liabilities     95,038       100,589  
Long-term debt     78,755       88,789  
Long-term pension liability     13,517       13,284  
Long-term acquisition-related contingent liabilities     -       557  
Long-term operating lease liabilities     11,295       12,809  
Other long-term liabilities     9,236       8,784  
Total liabilities     207,841       224,812  
Shareholders’ equity:                
Preferred stock, $.001 par value - authorized 300,000 shares (none issued)     -       -  
Common stock, $.001 par value - authorized 50,000,000 shares, issued and outstanding 16,331,962 and 16,564,712 shares, respectively     16       16  
Additional paid-in capital     81,859       77,443  
Retained earnings     121,052       122,464  
Accumulated other comprehensive loss, net of tax:                
Pensions     (1,054 )     (1,122 )
Foreign currency translation adjustment     (2,364 )     (1,163 )
Total shareholders’ equity     199,509       197,638  
   Total liabilities and shareholders’ equity   $ 407,350     $ 422,450  
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands)
 
    Nine Months Ended September 30,  
    2024     2023  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income   $ 9,915     $ 5,215  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     9,872       10,331  
Inventory write-downs     1,893       1,609  
Provision for bad debts - accounts receivable     251       64  
Share-based compensation expense     2,905       3,523  
Change in fair value of acquisition-related contingent liabilities     363       (442 )
Change in fair value of written put options     653       (460 )
Changes in assets and liabilities:                
Accounts receivable     3,891       9,650  
Contract assets     (1,671 )     6,208  
Inventories     2,241       18,280  
Prepaid expenses and other current assets     (1,292 )     3,462  
Other assets     (959 )     (844 )
Accounts payable and other current liabilities     (4,292 )     2,148  
Payment of acquisition-related contingent liabilities     (686 )     (279 )
Long-term pension liability     325       561  
Other long-term liabilities     1,088       362  
Net cash provided by operating activities     24,497       59,388  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Additions to property, plant and equipment     (2,911 )     (4,023 )
Net cash used in investing activities     (2,911 )     (4,023 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Proceeds from borrowings of debt     31,000       4,000  
Repayment of debt     (40,281 )     (51,813 )
Debt issuance costs     -       (300 )
Payment of cash dividends     (6,994 )     (6,886 )
Payment of acquisition-related contingent liabilities     (897 )     (553 )
Proceeds received on exercise of stock options     1,118       97  
Common shares repurchased and retired     (6,346 )     -  
Net cash used in financing activities     (22,400 )     (55,455 )
                 
Effect of currency exchange rates on cash     (709 )     97  
Net increase (decrease) in cash and cash equivalents     (1,523 )     7  
Cash and cash equivalents balance, beginning of period     19,896       17,722  
Cash and cash equivalents balance, end of period   $ 18,373     $ 17,729  
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES(Unaudited)(In thousands, except shares and per share data)
 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2024     2023     2024     2023  
Net income   $ 5,403     $ 3,114     $ 9,915     $ 5,215  
Interest expense     1,569       2,464       4,897       7,658  
Income tax expense     1,170       160       1,900       380  
Depreciation and amortization     3,252       3,515       9,872       10,331  
Impairment Charge     260       -       260       -  
EBITDA(1)   $ 11,654     $ 9,253     $ 26,844     $ 23,584  
EBITDA margin(1)     7.8 %     6.8 %     6.4 %     6.0 %

(1) EBITDA, which is a non-GAAP financial measure, is defined as net income excluding interest expense, income tax expense and depreciation and amortization expense. EBITDA margin is defined as EBITDA divided by net sales. The Company believes EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the Company’s core operating results from period to period by removing (i) the impact of the Company’s capital structure (interest expense from outstanding debt), (ii) tax consequences and (iii) asset base (depreciation and amortization). The Company uses EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs. EBITDA is not a measure of financial performance under GAAP.  EBITDA should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate EBITDA are significant components in understanding and assessing the Company’s results of operations. The presentation of the Company’s EBITDA may change from time to time, including as a result of changed business conditions, new accounting pronouncements or otherwise. If the presentation changes, the Company undertakes to disclose any change between periods and the reasons underlying that change. The Company’s EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIESSUPPLEMENTAL INFORMATION - REPORTABLE SEGMENTS(Unaudited)(In thousands)
 
    Branded Products     Healthcare Apparel     Contact Centers     Intersegment Eliminations     Other     Total  
For the Three Months Ended September 30, 2024:                                                
Net sales   $ 92,547     $ 33,025     $ 25,038     $ (920 )   $ -     $ 149,690  
Cost of goods sold     59,037       19,216       11,296       (405 )     -       89,144  
Gross margin     33,510       13,809       13,742       (515 )     -       60,546  
Selling and administrative expenses     24,223       11,240       11,482       (515 )     5,785       52,215  
Other periodic pension cost     -       -       -       -       189       189  
Add: Impairment charge     -       260       -       -       -       260  
Add: Depreciation and amortization     1,446       944       770       -       92       3,252  
Segment EBITDA(1)   $ 10,733     $ 3,773     $ 3,030     $ -     $ (5,882 )   $ 11,654  
                                                 
    Branded Products     HealthcareApparel     Contact Centers     Intersegment Eliminations     Other     Total  
For the Three Months Ended September 30, 2023:                                                
Net sales   $ 83,512     $ 29,649     $ 24,121     $ (1,156 )   $ -     $ 136,126  
Cost of goods sold     54,588       18,165       10,724       (549 )     -       82,928  
Gross margin     28,924       11,484       13,397       (607 )     -       53,198  
Selling and administrative expenses     23,418       9,493       10,224       (607 )     4,718       47,246  
Other periodic pension cost     -       -       -       -       214       214  
Add: Depreciation and amortization     1,452       1,064       880       -       119       3,515  
Segment EBITDA(1)   $ 6,958     $ 3,055     $ 4,053     $ -     $ (4,813 )   $ 9,253  
                                                 
    Branded Products     Healthcare Apparel     Contact Centers     Intersegment Eliminations     Other     Total  
For the Nine Months Ended September 30, 2024:                                                
Net sales   $ 260,911     $ 88,854     $ 73,422     $ (2,919 )   $ -     $ 420,268  
Cost of goods sold     167,534       53,335       34,075       (1,294 )     -       253,650  
Gross margin     93,377       35,519       39,347       (1,625 )     -       166,618  
Selling and administrative expenses     70,486       30,931       32,436       (1,625 )     17,111       149,339  
Other periodic pension cost     -       -       -       -       567       567  
Add: Impairment charge     -       260       -       -       -       260  
Add: Depreciation and amortization     4,513       2,837       2,246       -       276       9,872  
Segment EBITDA(1)   $ 27,404     $ 7,685     $ 9,157     $ -     $ (17,402 )   $ 26,844  
                                                 
    Branded Products     Healthcare Apparel     Contact Centers     Intersegment Eliminations     Other     Total  
For the Nine Months Ended September 30, 2023:                                                
Net sales   $ 244,955     $ 85,875     $ 68,935     $ (3,704 )   $ -     $ 396,061  
Cost of goods sold     164,492       53,872       31,545       (1,750 )     -       248,159  
Gross margin     80,463       32,003       37,390       (1,954 )     -       147,902  
Selling and administrative expenses     63,833       28,461       29,502       (1,954 )     14,165       134,007  
Other periodic pension cost     -       -       -       -       642       642  
Add: Depreciation and amortization     4,826       3,014       2,210       -       281       10,331  
Segment EBITDA(1)   $ 21,456     $ 6,556     $ 10,098     $ -     $ (14,526 )   $ 23,584  

(1) Segment EBITDA is our primary measure of segment profitability under U.S. GAAP ASC 280 “Segment Reporting”. Amounts included in income before income tax expense and excluded from Segment EBITDA include: interest expense and depreciation and amortization expense. Total EBITDA is a non-GAAP financial measure. Please see reconciliation of Total EBITDA included in the Non-GAAP Financial Measures table above.

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