Superior Group of Companies, Inc. (NASDAQ: SGC), today announced
its first quarter operating results for 2020.
The Company announced that for the first quarter
ended March 31, 2020, net sales increased 8.9 percent to $94.2
million, compared to first quarter 2019 net sales of $86.6 million.
Pretax Income was $4.6 million compared to $3.0 million in 2019.
Net income was $3.4 million or $0.22 per diluted share compared to
$2.4 million or $0.16 per diluted share for the first quarter of
2019.
Michael Benstock, Chief Executive Officer,
commented, “Under normal circumstances, this earnings release would
talk about how pleased we are to report the strong operating
results that we had in the first quarter with sales up nicely at
8.9% and earnings per share up 37.5% as we continue to execute
against our long-term growth strategies. However, these are
not normal times. While the COVID-19 pandemic only had a
moderate impact on our operating results the last few weeks of the
first quarter, it is expected to have a much more significant
impact as we move forward. On the positive side, our
healthcare uniform business is experiencing a tremendous surge in
demand to support the increased requirements to outfit an
ever-increasing number of healthcare workers on the front lines of
the battle against the Coronavirus. Additionally, demand
remains strong in the portion of our HPI business that supports
businesses designated as essential such as grocery, big box
retailers and pharmacy customers. These increases in demand
are being offset by significant slowing in the dining,
entertainment, lodging and transportation markets.
“In our promotional products segment, marketing
budget reductions and event cancellations have impacted the entire
branded merchandise industry, which is significantly event driven.
A prolonged moratorium on events and a reduction of in-store
promotions will negatively impact our operating results in this
segment as we move forward. However, our BAMKO team,
utilizing our strong sourcing network and resources has been
instrumental in sourcing much needed personal protective equipment
(PPE) that many customers have been asking for, filling a critical
need during this crisis and helping to offset a significant amount
of the negative impact in revenues. Many of these products are new
revenue sources for BAMKO and other SGC divisions.
“Our BPO segment, The Office Gurus, experienced
a slight disruption in business at the very end of the first
quarter as they had to adjust quickly to the government action in
El Salvador closing all call center facilities. They were
able to pivot very quickly and successfully to a work from home
model and continue to service their customers very well. To
help offset the possibility of future deterioration in sales
associated with the pandemic, we are actively pursuing several new
opportunities from prospective clients that need support due to
either their call center partner’s inability to deploy a work from
home solution or their inability to continue to employ their own
internal support.
We believe that once demand normalizes for our
current clients’ needs, we will have the opportunity to explore
more growth in our nearshore centers. We will also be prepared to
capitalize on the new knowledge that we have acquired through this
crisis and several new opportunities, such as the ability to
increase our capacity substantially by continuing to work from home
for certain accounts and offering this solution to future
prospects. We also anticipate that some smaller nearby centers will
be unable to weather the storm, making their clients and agents
available to us, which will reduce our customer acquisition costs
and recruiting expense.
“We are focused on maintaining liquidity during
this time. We have demonstrated many times in the past that
our balance sheet typically becomes more liquid in an economic
downturn. We have made appropriate and significant reductions
in operating expenses, and will also reduce certain capital
expenditures to preserve capital. We are confident that we
have access to adequate liquidity to meet our needs at this
time. While the magnitude of this pandemic is larger
than the many catastrophes and economic downturns that we have
faced in the past century, we have a well-seasoned management team
that has a long track record of weathering the storm and coming out
of the back end even stronger than when it began.
“Our primary concern is for the safety of our
workforce and customers. We are proud of our leadership and
associates who have worked tirelessly at home, in factories,
distribution facilities and our offices around the world to support
the multitude of essential businesses that rely on us. We
send our hopes and best wishes for good health to all of those who
are working to ensure the well-being of our nation and the world.
Those on the front line of this battle are heroes to all of us and
deserve our respect, prayers, support and praise during this
difficult time.”
CONFERENCE CALL
Superior Group of Companies will hold a
conference call on Thursday, April 30, 2020 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
May 14, 2020. 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 10141209 for
all replay access.
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) the projected impact of the
current coronavirus (COVID-19) on our, our customers’, and our
suppliers’ businesses, (2) projections of revenue, income, and
other items relating to our financial position and results of
operations, (3) statements of our plans, objectives, strategies,
goals and intentions, (4) statements regarding the capabilities,
capacities, market position and expected development of our
business operations, and (5) 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; the effect of uncertainties related to the
current coronavirus (COVID-19) pandemic on the U.S. and global
markets, our business, operations, customers, suppliers and
employees, including without limitation the length and scope of the
restrictions imposed by various governments and success of efforts
to find a suitable vaccine, among other factors; general
economic conditions, including employment levels, in the areas of
the United States of America (“United States”) in
which the Company’s customers are located; changes in the
healthcare, industrial, commercial, leisure and public safety
industries where uniforms and service apparel are worn; our ability
to identify suitable acquisition targets, successfully integrate
any acquired businesses, successfully manage our expanding
operations, or discover liabilities associated with such business
during the diligence process; the price and availability of cotton
and other manufacturing materials; attracting and retaining senior
management and key personnel 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,
2019. 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):
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 workday, 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:
Andrew D. Demott,
Jr.
COO, CFO &
Treasurer
(727) 803-7135
-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 |
(Unaudited) |
(In thousands,
except share and par value data) |
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2020 |
|
2019 |
Net sales |
|
$ |
94,245 |
|
$ |
86,552 |
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
Cost of goods sold |
|
|
60,794 |
|
|
56,284 |
Selling and administrative expenses |
|
|
27,489 |
|
|
25,863 |
Other periodic pension costs |
|
|
285 |
|
|
259 |
Interest expense |
|
|
1,060 |
|
|
1,170 |
|
|
|
89,628 |
|
|
83,576 |
Income
before taxes on income |
|
|
4,617 |
|
|
2,976 |
|
|
|
|
|
Income tax
expense |
|
|
1,250 |
|
|
600 |
|
|
|
|
|
Net
income |
|
$ |
3,367 |
|
$ |
2,376 |
|
|
|
|
|
Net income
per share: |
|
|
|
|
Basic |
|
$ |
0.22 |
|
$ |
0.16 |
Diluted |
|
$ |
0.22 |
|
$ |
0.16 |
|
|
|
|
|
Weighted
average shares outstanding during the period: |
|
|
|
|
Basic |
|
|
15,024,851 |
|
|
14,927,341 |
Diluted |
|
|
15,200,898 |
|
|
15,262,654 |
|
|
|
|
|
Cash
dividends per common share |
|
$ |
0.10 |
|
$ |
0.10 |
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands,
except share and par value data) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,773 |
|
|
$ |
9,038 |
|
Accounts receivable, less allowance for doubtful accounts of $3,270
and $2,964, respectively |
|
|
73,551 |
|
|
|
79,746 |
|
Accounts receivable - other |
|
|
658 |
|
|
|
1,083 |
|
Inventories |
|
|
73,844 |
|
|
|
73,379 |
|
Contract assets |
|
|
38,234 |
|
|
|
38,533 |
|
Prepaid expenses and other current assets |
|
|
7,395 |
|
|
|
9,934 |
|
Total current assets |
|
|
199,455 |
|
|
|
211,713 |
|
Property,
plant and equipment, net |
|
|
33,971 |
|
|
|
32,825 |
|
Operating
lease right-of-use assets |
|
|
5,033 |
|
|
|
5,445 |
|
Intangible
assets, net |
|
|
61,582 |
|
|
|
62,536 |
|
Goodwill |
|
|
36,096 |
|
|
|
36,292 |
|
Other
assets |
|
|
8,469 |
|
|
|
10,122 |
|
Total assets |
|
$ |
344,606 |
|
|
$ |
358,933 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
24,660 |
|
|
$ |
33,271 |
|
Other current liabilities |
|
|
31,709 |
|
|
|
18,894 |
|
Current portion of long-term debt |
|
|
11,464 |
|
|
|
15,286 |
|
Current portion of acquisition-related contingent liabilities |
|
|
1,953 |
|
|
|
1,905 |
|
Total current liabilities |
|
|
69,786 |
|
|
|
69,356 |
|
Long-term
debt |
|
|
89,662 |
|
|
|
104,003 |
|
Long-term
pension liability |
|
|
10,092 |
|
|
|
10,253 |
|
Long-term
acquisition-related contingent liabilities |
|
|
3,552 |
|
|
|
3,423 |
|
Long-term
operating lease liabilities |
|
|
2,133 |
|
|
|
2,380 |
|
Deferred tax
liability |
|
|
5,970 |
|
|
|
7,042 |
|
Other
long-term liabilities |
|
|
5,021 |
|
|
|
4,922 |
|
Commitments
and contingencies (Note 6) |
|
|
|
|
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 15,222,161 and 15,227,604 shares,
respectively. |
|
|
15 |
|
|
|
15 |
|
Additional paid-in capital |
|
|
57,669 |
|
|
|
57,442 |
|
Retained earnings |
|
|
109,086 |
|
|
|
107,581 |
|
Accumulated other comprehensive income (loss), net of tax: |
|
|
|
|
Pensions |
|
|
(6,876 |
) |
|
|
(7,224 |
) |
Cash flow hedges |
|
|
86 |
|
|
|
91 |
|
Foreign currency translation adjustment |
|
|
(1,590 |
) |
|
|
(351 |
) |
Total shareholders’ equity |
|
|
158,390 |
|
|
|
157,554 |
|
Total liabilities and shareholders’ equity |
|
$ |
344,606 |
|
|
$ |
358,933 |
|
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2020 |
|
2019 |
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
Net
income |
|
$ |
3,367 |
|
|
$ |
2,376 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
|
1,869 |
|
|
|
2,060 |
|
Provision for bad debts - accounts receivable |
|
|
865 |
|
|
|
138 |
|
Share-based compensation expense |
|
|
399 |
|
|
|
481 |
|
Deferred income tax benefit |
|
|
(784 |
) |
|
|
(1,182 |
) |
Gain on sale of property, plant and equipment |
|
|
- |
|
|
|
(3 |
) |
Change in fair value of acquisition-related contingent
liabilities |
|
|
175 |
|
|
|
201 |
|
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable - trade |
|
|
4,940 |
|
|
|
309 |
|
Accounts receivable - other |
|
|
425 |
|
|
|
312 |
|
Contract assets |
|
|
299 |
|
|
|
1,876 |
|
Inventories |
|
|
(831 |
) |
|
|
1,522 |
|
Prepaid expenses and other current assets |
|
|
2,327 |
|
|
|
(2,197 |
) |
Other assets |
|
|
1,410 |
|
|
|
(1,503 |
) |
Accounts payable and other current liabilities |
|
|
4,656 |
|
|
|
(12 |
) |
Long-term pension liability |
|
|
294 |
|
|
|
262 |
|
Other long-term liabilities |
|
|
134 |
|
|
|
1,099 |
|
Net cash provided by operating activities |
|
|
19,545 |
|
|
|
5,739 |
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
Additions to
property, plant and equipment |
|
|
(2,073 |
) |
|
|
(1,723 |
) |
Proceeds
from disposals of property, plant and equipment |
|
|
- |
|
|
|
3 |
|
Net cash used in investing activities |
|
|
(2,073 |
) |
|
|
(1,720 |
) |
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
|
|
Proceeds
from borrowings of debt |
|
|
34,488 |
|
|
|
54,856 |
|
Repayment of
debt |
|
|
(52,672 |
) |
|
|
(55,161 |
) |
Payment of
cash dividends |
|
|
(1,521 |
) |
|
|
(1,515 |
) |
Proceeds
received on exercise of stock options |
|
|
- |
|
|
|
210 |
|
Tax
(provision) benefit from vesting of acquisition-related restricted
stock |
|
|
(13 |
) |
|
|
30 |
|
Common stock
reacquired and retired |
|
|
(500 |
) |
|
|
(992 |
) |
Net cash used in financing activities |
|
|
(20,218 |
) |
|
|
(2,572 |
) |
|
|
|
|
|
Effect of
currency exchange rates on cash |
|
|
(519 |
) |
|
|
15 |
|
Net increase
(decrease) in cash and cash equivalents |
|
|
(3,265 |
) |
|
|
1,462 |
|
Cash and
cash equivalents balance, beginning of period |
|
|
9,038 |
|
|
|
5,362 |
|
Cash and
cash equivalents balance, end of period |
|
$ |
5,773 |
|
|
$ |
6,824 |
|
|
|
|
|
|
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