Superior Group of Companies, Inc. (NASDAQ: SGC), today announced
its third quarter operating results for 2020.
The Company reported that for the third quarter
ended September 30, 2020, net sales increased 43 percent to $127.8
million, compared to third quarter 2019 net sales of $89.5 million.
Pretax Income was $12.1 million compared to $4.6 million for the
third quarter of 2019. Net income was $10.0 million, or $0.63 per
diluted share, compared to $3.9 million, or $0.26 per diluted
share, for the third quarter of 2019.
Michael Benstock, Chief Executive Officer,
commented, “Our third quarter continued the robust momentum of the
first half of the year. The dedication and relentlessness of our
team members has again yielded positive results. Our pre-existing
strategy of selling to a diverse range of customers remains in
place and bodes well for our future, especially as we continue to
provide products and services to many essential businesses in all
of our SGC segments. Both our uniform and promotional products
segments have strong opportunity pipelines and backlogs. The Office
Gurus segment continues to grow, including by leveraging its work
from home solution to increase capacity. While we have no certainty
as to how the pandemic will impact our customers in the future, we
are fully prepared to meet the challenges that might face us. We
have made the proper investments in our people, technology and
product development, and we continue to do so at an accelerated
pace when needed. While we are living in the most uncertain of
times, we have met challenges throughout our 100 years with
innovation and success. We will continue to do so going forward in
a way that focuses on building long-term shareholder value.
“As a result of the cash flow generated in the
quarter from operating activities, we were able to further reduce
our outstanding debt by an additional $8.2 million, resulting in
more than a $42.5 million net debt repayment through the first
three quarters of 2020. This additional reduction
has bolstered our ability to capitalize on opportunities as
they arise.
“While we do not generally provide guidance on
individual quarters or years, we are confident that we will
continue to see significant increases in our net sales and income
in comparison with prior year periods for the balance of the
year.”
CONFERENCE CALL
Superior Group of Companies will hold a
conference call on Thursday, October 29, 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 November 5, 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
10148875 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 and hospitality 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, polyester
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 our customers unlock the power of their brands by
creating extraordinary brand experiences for their employees and
customers. We provide customized support for each of our divisions
through our 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 we serve. We 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. We 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 our customers in
order to accelerate their growth and improve our customers’ service
experiences.
SGC’s commitment to service, technology, quality
and value-added benefits, as well as our financial strength and
resources, provides unparalleled support for our customers’ diverse
needs while embracing a “Customer 1st, Every Time!” philosophy and
culture in all of our business segments.
Visit www.superiorgroupofcompanies.com for more information.
Contact: |
|
|
Andrew D. Demott, Jr. |
|
Hala Elsherbini |
COO, CFO & Treasurer |
-OR- |
Senior Managing Director |
(727) 803-7135 |
|
Three Part Advisors |
|
|
(214) 442-0016 |
|
|
|
Comparative figures are as follows:
SUPERIOR GROUP
OF COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
2020 |
|
|
|
2019 |
|
Net
sales |
|
$ |
127,737 |
|
|
$ |
89,466 |
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
Cost of goods sold |
|
|
80,285 |
|
|
|
58,015 |
|
Selling and administrative expenses |
|
|
34,917 |
|
|
|
25,260 |
|
Other periodic pension costs |
|
|
212 |
|
|
|
476 |
|
Interest expense |
|
|
239 |
|
|
|
1,085 |
|
|
|
|
115,653 |
|
|
|
84,836 |
|
Income
before taxes on income |
|
|
12,084 |
|
|
|
4,630 |
|
Income tax
expense |
|
|
2,140 |
|
|
|
709 |
|
Net
income |
|
$ |
9,944 |
|
|
$ |
3,921 |
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
Basic |
|
$ |
0.66 |
|
|
$ |
0.26 |
|
Diluted |
|
$ |
0.63 |
|
|
$ |
0.26 |
|
|
|
|
|
|
Weighted
average shares outstanding during the period: |
|
|
|
|
Basic |
|
|
15,084,300 |
|
|
|
14,947,552 |
|
Diluted |
|
|
15,711,122 |
|
|
|
15,266,850 |
|
|
|
|
|
|
Cash
dividends per common share |
|
$ |
0.20 |
|
|
$ |
0.10 |
|
|
|
|
|
|
SUPERIOR GROUP
OF COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands,
except shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
|
2019 |
|
Net
sales |
|
$ |
381,341 |
|
|
$ |
268,288 |
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
Cost of goods sold |
|
|
244,500 |
|
|
|
174,226 |
|
Selling and administrative expenses |
|
|
98,704 |
|
|
|
78,008 |
|
Other periodic pension costs |
|
|
830 |
|
|
|
1,282 |
|
Interest expense |
|
|
1,732 |
|
|
|
3,514 |
|
|
|
|
345,766 |
|
|
|
257,030 |
|
Income
before taxes on income |
|
|
35,575 |
|
|
|
11,258 |
|
Income tax
expense |
|
|
7,090 |
|
|
|
2,180 |
|
Net
income |
|
$ |
28,485 |
|
|
$ |
9,078 |
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
Basic |
|
$ |
1.89 |
|
|
$ |
0.61 |
|
Diluted |
|
$ |
1.85 |
|
|
$ |
0.59 |
|
|
|
|
|
|
Weighted
average shares outstanding during the period |
|
|
|
|
Basic |
|
|
15,041,738 |
|
|
|
14,942,565 |
|
Diluted |
|
|
15,361,035 |
|
|
|
15,272,287 |
|
|
|
|
|
|
Cash
dividends per common share |
|
$ |
0.30 |
|
|
$ |
0.30 |
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands,
except share and par value data) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,651 |
|
|
$ |
9,038 |
|
Accounts receivable, less allowance for doubtful accounts of $7,922
and $2,964, respectively |
|
|
85,297 |
|
|
|
79,746 |
|
Accounts receivable - other |
|
|
2,204 |
|
|
|
1,083 |
|
Inventories |
|
|
80,221 |
|
|
|
73,379 |
|
Contract assets |
|
|
35,484 |
|
|
|
38,533 |
|
Prepaid expenses and other current assets |
|
|
13,094 |
|
|
|
9,934 |
|
Total current assets |
|
|
221,951 |
|
|
|
211,713 |
|
Property,
plant and equipment, net |
|
|
35,421 |
|
|
|
32,825 |
|
Operating
lease right-of-use assets |
|
|
4,143 |
|
|
|
5,445 |
|
Intangible
assets, net |
|
|
59,696 |
|
|
|
62,536 |
|
Goodwill |
|
|
36,055 |
|
|
|
36,292 |
|
Other
assets |
|
|
9,972 |
|
|
|
10,122 |
|
Total assets |
|
$ |
367,238 |
|
|
$ |
358,933 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
30,512 |
|
|
$ |
33,271 |
|
Other current liabilities |
|
|
49,890 |
|
|
|
18,894 |
|
Current portion of long-term debt |
|
|
15,286 |
|
|
|
15,286 |
|
Current portion of acquisition-related contingent liabilities |
|
|
4,307 |
|
|
|
1,905 |
|
Total current liabilities |
|
|
99,995 |
|
|
|
69,356 |
|
Long-term
debt |
|
|
61,511 |
|
|
|
104,003 |
|
Long-term
pension liability |
|
|
9,771 |
|
|
|
10,253 |
|
Long-term
acquisition-related contingent liabilities |
|
|
1,815 |
|
|
|
3,423 |
|
Long-term
operating lease liabilities |
|
|
1,724 |
|
|
|
2,380 |
|
Deferred tax
liability |
|
|
3,260 |
|
|
|
7,042 |
|
Other
long-term liabilities |
|
|
5,581 |
|
|
|
4,922 |
|
Commitments
and contingencies |
|
|
|
|
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 15,340,949 and 15,227,604 shares,
respectively. |
|
|
15 |
|
|
|
15 |
|
Additional paid-in capital |
|
|
60,618 |
|
|
|
57,442 |
|
Retained earnings |
|
|
130,968 |
|
|
|
107,581 |
|
Accumulated other comprehensive income (loss), net of tax: |
|
|
|
|
Pensions |
|
|
(6,198 |
) |
|
|
(7,224 |
) |
Cash flow hedges |
|
|
75 |
|
|
|
91 |
|
Foreign currency translation adjustment |
|
|
(1,897 |
) |
|
|
(351 |
) |
Total shareholders’ equity |
|
|
183,581 |
|
|
|
157,554 |
|
Total liabilities and shareholders’ equity |
|
$ |
367,238 |
|
|
$ |
358,933 |
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
|
2019 |
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
Net
income |
|
$ |
28,485 |
|
|
$ |
9,078 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
Depreciation and amortization |
|
|
5,972 |
|
|
|
6,339 |
|
Provision for bad debts - accounts receivable |
|
|
6,099 |
|
|
|
719 |
|
Share-based compensation expense |
|
|
1,790 |
|
|
|
997 |
|
Deferred income tax benefit |
|
|
(3,654 |
) |
|
|
(2,136 |
) |
Gain on sale of property, plant and equipment |
|
|
- |
|
|
|
(5 |
) |
Change in fair value of acquisition-related contingent
liabilities |
|
|
2,759 |
|
|
|
(272 |
) |
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable - trade |
|
|
(12,225 |
) |
|
|
(12,251 |
) |
Accounts receivable - other |
|
|
(1,121 |
) |
|
|
481 |
|
Contract assets |
|
|
3,049 |
|
|
|
11,206 |
|
Inventories |
|
|
(7,306 |
) |
|
|
(595 |
) |
Prepaid expenses and other current assets |
|
|
(3,592 |
) |
|
|
(7,051 |
) |
Other assets |
|
|
1 |
|
|
|
(2,233 |
) |
Accounts payable and other current liabilities |
|
|
29,167 |
|
|
|
5,523 |
|
Long-term pension liability |
|
|
864 |
|
|
|
1,292 |
|
Other long-term liabilities |
|
|
779 |
|
|
|
750 |
|
Net cash provided by operating activities |
|
|
51,067 |
|
|
|
11,842 |
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
Additions to
property, plant and equipment |
|
|
(5,711 |
) |
|
|
(6,424 |
) |
Proceeds
from disposals of property, plant and equipment |
|
|
- |
|
|
|
5 |
|
Net cash used in investing activities |
|
|
(5,711 |
) |
|
|
(6,419 |
) |
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
|
|
Proceeds
from borrowings of debt |
|
|
137,559 |
|
|
|
125,121 |
|
Repayment of
debt |
|
|
(180,112 |
) |
|
|
(123,600 |
) |
Payment of
cash dividends |
|
|
(4,574 |
) |
|
|
(4,533 |
) |
Payment of
acquisition-related contingent liability |
|
|
(1,966 |
) |
|
|
(961 |
) |
Proceeds
received on exercise of stock options |
|
|
1,407 |
|
|
|
283 |
|
Tax
withholding on exercise of stock rights |
|
|
(32 |
) |
|
|
- |
|
Tax
(provision) benefit from vesting of acquisition-related restricted
stock |
|
|
(13 |
) |
|
|
30 |
|
Common stock
reacquired and retired |
|
|
(500 |
) |
|
|
(1,243 |
) |
Net cash used in financing activities |
|
|
(48,231 |
) |
|
|
(4,903 |
) |
|
|
|
|
|
Effect of
currency exchange rates on cash |
|
|
(512 |
) |
|
|
(430 |
) |
Net increase
(decrease) in cash and cash equivalents |
|
|
(3,387 |
) |
|
|
90 |
|
Cash and
cash equivalents balance, beginning of period |
|
|
9,038 |
|
|
|
5,362 |
|
Cash and
cash equivalents balance, end of period |
|
$ |
5,651 |
|
|
$ |
5,452 |
|
|
|
|
|
|
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