SGC Superior Group of Companies Inc

Superior Group of Companies, Inc. (NASDAQ: SGC), today announced its third quarter operating results for 2019.

The Company announced that for the third quarter ended September 30, 2019, net sales decreased 7.0 percent to $89.5 million, compared to third quarter 2018 net sales of $95.9 million. Pretax Income was $4.6 million compared to $7.3 million in 2018. Net income was $3.9 million or $0.26 per diluted share, compared to $0.39 per diluted share in 2018.  

Michael Benstock, Chief Executive Officer commented “We are very pleased with the performance at BAMKO and The Office Gurus whose businesses continued to grow significantly in very competitive environments. Uniform segment sales were down between comparable periods, largely the result of initiatives taken by the company to reduce merchandise levels, resulting in fewer receipts, and lower revenues based upon current revenue recognition standards.  Also during the quarter we experienced sales disruption at CID caused by a warehouse system implementation. On an overall basis, we made good progress and remain on schedule on our ERP integration initiatives intended to align infrastructure, support enterprise growth and value creation for all stakeholders” concluded Mr. Benstock.

CONFERENCE CALL

Superior Group of Companies will hold a conference call on Wednesday, October 23, 2019 at 2:00 p.m. Eastern Time to discuss the Company’s results. Interested individuals may join the teleconference by dialing (844) 861-5505 for U.S. dialers and (412) 317-6586 for International dialers. The Canadian Toll Free number is (866) 605-3852. Please ask to be joined into the Superior Group of Companies call. The live webcast and archived replay can also be accessed in the investor information section of the Company’s website at www.superiorgroupofcompanies.com.

A telephone replay of the teleconference will be available one hour after the end of the call through 2:00 p.m. Eastern Time on November 6, 2019. To access the replay, dial (877) 344-7529 in the United States or (412) 317-0088 from international locations.  Canadian dialers can access the replay at (855) 669-9658.  Please reference conference number 10135411 for all replay access.

About Superior Group of Companies, Inc. (SGC):

Superior Group of Companies™, formerly Superior Uniform Group, established in 1920, is a combination of companies that help customers unlock the power of their brands by creating extraordinary brand experiences for employees and customers. It provides customized support for each of its divisions through its shared services model.

Fashion Seal Healthcare®, HPI™ and CID Resources are signature uniform brands of Superior Group of Companies. Each is one of America’s leading providers of uniforms and image apparel in the markets it serves. They specialize in innovative uniform program design, global manufacturing, and state-of-the-art distribution. Every day, more than 6 million Americans go to work wearing a uniform from Superior Group of Companies.

BAMKO®, Tangerine Promotions® and Public Identity® are signature promotional products and branded merchandise brands of Superior Group of Companies. They provide unique custom branding, design, sourcing, and marketing solutions to some of the world’s most successful brands.

The Office Gurus® is a global provider of custom call and contact center support. As a true strategic partner, The Office Gurus implements customized solutions for its customers in order to accelerate their growth and improve their customers’ service experiences.

SGC’s commitment to service, technology, quality and value-added benefits, as well as its financial strength and resources, provides unparalleled support for its customers’ diverse needs while embracing a “Customer 1st, Every Time!” philosophy and culture in all of its business segments.

Visit www.superiorgroupofcompanies.com for more information.

Contact:Michael Attinella Chief Financial Officer & Treasurer(727) 803-7170

OR

Hala ElsherbiniHalliburton Investor Relations(972) 458-8000

Comparative figures are as follows:

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30,
(Unaudited)
(In thousands, except shares and per share data)
		2019			2018
Net sales	$	89,466		$	95,870
Costs and expenses:
Cost of goods sold		58,015			62,070
Selling and administrative expenses		25,260			25,482
Other periodic pension costs		476			96
Interest expense		1,085			940
		84,836			88,588
Income before taxes on income		4,630			7,282
Income tax expense		709			1,160
Net income	$	3,921		$	6,122
Net income per share:
Basic	$	0.26		$	0.41
Diluted	$	0.26		$	0.39
Weighted average number of shares outstanding during the period
Basic		14,947,552			15,010,660
Diluted		15,266,850			15,499,894
Cash dividends per common share	$	0.10		$	0.10

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended September 30,
(Unaudited)
(In thousands, except shares and per share data)
		2019			2018
Net sales	$	268,288		$	251,349
Costs and expenses:
Cost of goods sold		174,226			163,396
Selling and administrative expenses		78,008			69,991
Other periodic pension costs		1,282			289
Interest expense		3,514			1,974
		257,030			235,650
Income before taxes on income		11,258			15,699
Income tax expense		2,180			3,310
Net income	$	9,078		$	12,389
Net income per share:
Basic	$	0.61		$	0.83
Diluted	$	0.59		$	0.80
Weighted average number of shares outstanding during the period
Basic		14,942,565			14,929,513
Diluted		15,272,287			15,505,642
Cash dividends per common share	$	0.30		$	0.29

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and par value data)
	September 30,				December 31,
		2019				2018
ASSETS
Current assets:
Cash and cash equivalents	$	5,452			$	5,362
Accounts receivable, less allowance for doubtful accounts of $2,259 and $2,042, respectively		75,597				64,017
Accounts receivable - other		1,262				1,744
Inventories		66,076				67,301
Contract assets		38,030				49,236
Prepaid expenses and other current assets		16,481				9,552
Total current assets		202,898				197,212
Property, plant and equipment, net		31,725				28,769
Operating lease right-of-use assets		4,576				-
Intangible assets, net		63,491				66,312
Goodwill		36,252				33,961
Other assets		10,443				8,832
Total assets	$	349,385			$	335,086
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30,768			$	24,685
Other current liabilities		16,110				14,767
Current portion of long-term debt		15,286				6,000
Current portion of acquisition-related contingent liabilities		1,374				941
Total current liabilities		63,538				46,393
Long-term debt		103,812				111,522
Long-term pension liability		8,422				8,705
Long-term acquisition-related contingent liabilities		3,753				5,422
Long-term operating lease liabilities		2,590				-
Deferred tax liability		6,620				8,475
Other long-term liabilities		4,230				3,648
Commitments and contingencies (Note 5)
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 15,240,317 and 15,202,387 shares, respectively.		15				15
Additional paid-in capital		57,077				55,859
Retained earnings		106,426				103,032
Accumulated other comprehensive income (loss), net of tax:
Pensions		(6,475	)			(7,673	)
Cash flow hedges		97				113
Foreign currency translation adjustment		(720	)			(425	)
Total shareholders’ equity		156,420				150,921
Total liabilities and shareholders’ equity	$	349,385			$	335,086

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
(Unaudited)
(In thousands)
		2019				2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	9,078			$	12,389
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,339				5,745
Provision for bad debts - accounts receivable		719				409
Share-based compensation expense		997				1,867
Deferred income tax benefit		(2,136	)			(278	)
Gain on sale of property, plant and equipment		(5	)			-
Change in fair value of acquisition-related contingent liabilities		(272	)			(1,212	)
Changes in assets and liabilities, net of acquisition of business:
Accounts receivable - trade		(12,251	)			(5,542	)
Accounts receivable - other		481				(401	)
Contract assets		11,206				(3,779	)
Inventories		(595	)			5,742
Prepaid expenses and other current assets		(7,051	)			(226	)
Other assets		(2,233	)			(2,343	)
Accounts payable and other current liabilities		5,523				(1,077	)
Long-term pension liability		1,292				292
Other long-term liabilities		750				(283	)
Net cash provided by operating activities		11,842				11,303
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(6,424	)			(3,881	)
Proceeds from disposals of property, plant and equipment		5				-
Acquisition of businesses, net of acquired cash		-				(85,597	)
Net cash used in investing activities		(6,419	)			(89,478	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings of debt		125,121				170,713
Repayment of debt		(123,600	)			(91,423	)
Payment of cash dividends		(4,533	)			(4,335	)
Payment of acquisition-related contingent liability		(961	)			(3,032	)
Proceeds received on exercise of stock options		283				432
Tax benefit from vesting of acquisition-related restricted stock		30				445
Tax withholding on exercise of stock rights		-				(17	)
Common stock reacquired and retired		(1,243	)			(268	)
Net cash provided by (used in) financing activities		(4,903	)			72,515
Effect of currency exchange rates on cash		(430	)			(174	)
Net increase (decrease) in cash and cash equivalents		90				(5,834	)
Cash and cash equivalents balance, beginning of year		5,362				8,130
Cash and cash equivalents balance, end of period	$	5,452			$	2,296