– Total Net Sales of $130.8 Million versus $143.6 million in Prior Year First Quarter –
– Net Income of $0.9 Million versus $5.2 Million in Prior Year First Quarter –
– EBITDA of $6.9 Million versus $10.0 Million in Prior Year First Quarter –
– Board of Directors Approved $0.14 Dividend for Next Quarterly Payment –
– Reaffirms Full-Year Guidance –
ST. PETERSBURG, Fla., May 08, 2023 — Superior Group of Companies, Inc. (NASDAQ: SGC) (the “Company”), today announced its first quarter 2023 results.
First Quarter Results
For the first quarter of 2023, net sales of $130.8 million compared to first quarter 2022 net sales of $143.6 million. Net income of $0.9 million or $0.06 per diluted share compared to $5.2 million or $0.32 per diluted share, respectively, in the first quarter of 2022.
“We’ve kicked off 2023 as expected with our Contact Centers segment continuing strong sales growth above 20% while soft economic conditions restrained growth at our Healthcare Apparel and Branded Products segments. During the quarter, we delivered on our commitment to drive significant free cash flow, lower working capital and reduce our net leverage position. As a result, SGC is in an attractive position to generate improved growth and profitability during the second half of the year as we indicated last quarter,” said Michael Benstock, Chief Executive Officer. “Today, we are reaffirming our full-year outlook, and as we wait for macro conditions to turn more favorable, our team remains focused on winning in the marketplace every day while optimizing our longer-term strategy to capitalize on the large and attractive end markets we serve. I also am pleased that our Board recently approved another quarterly dividend, reflecting our confidence in our continued solid performance during subdued economic times, and am excited about the many opportunities ahead of us to drive long-term shareholder value.”
Second Quarter 2023 Dividend
The Board of Directors declared a quarterly dividend of $0.14 per share, payable June 2, 2023, to shareholders of record as of May 19, 2023.
2023 Full-Year Outlook
For full-year 2023, the Company continues to forecast sales to be $585 million to $595 million compared $579 million in 2022, and earnings per share to be $0.92 to $0.97 compared to $0.62 of adjusted earnings per share in 2022.
Webcast and Conference Call
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 May 20, 2023. 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 3580777 for all replay access.
Disclosure Regarding Forward Looking Statements
Certain matters discussed in this Form 10-Q 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 Quarterly Report on Form 10-Q 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, (4) statements of expected industry and general economic trends and (5) the projected impact of the COVID-19 pandemic on our, our customers‘, and our suppliers‘ businesses.
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; lingering effects of the COVID-19 pandemic, including existing and possible future variants, on the United States and global markets, our business, operations, customers, suppliers and employees, including the length and scope of restrictions imposed by various governments and organizations and the continuing success of efforts to deliver effective vaccines and boosters, among other factors; changes in the healthcare, retail, hotel, 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 cotton and other manufacturing materials; attracting and retaining senior management and key personnel; the effect of the Company‘s 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 herein and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2023. 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™, established in 1920, is a combination of companies that help our customers unlock the power of their brands by creating extraordinary brand engagement experiences for their employees and customers. 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:
Investor Relations
[email protected]
Comparative figures are as follows:
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
| (Unaudited) | |||||
| (In thousands, except share and per share data) | |||||
| Three Months Ended March 31, | |||||
| 2023 | 2022 | ||||
| Net sales | $ | 130,773 | $ | 143,582 | |
| Costs and expenses: | |||||
| Cost of goods sold | 83,665 | 93,801 | |||
| Selling and administrative expenses | 43,379 | 42,214 | |||
| Other periodic pension costs | 214 | 528 | |||
| Interest expense | 2,570 | 299 | |||
| 129,828 | 136,842 | ||||
| Income before taxes on income | 945 | 6,740 | |||
| Income tax expense | 57 | 1,510 | |||
| Net income | $ | 888 | $ | 5,230 | |
| Net income per share: | |||||
| Basic | $ | 0.06 | $ | 0.33 | |
| Diluted | $ | 0.06 | $ | 0.32 | |
| Weighted average shares outstanding during the period: | |||||
| Basic | 15,882,994 | 15,679,027 | |||
| Diluted | 16,118,329 | 16,165,268 | |||
| Cash dividends per common share | $ | 0.14 | $ | 0.12 | |
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands, except share and par value data) | |||||||
| March 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 26,600 | $ | 17,722 | |||
| Accounts receivable, less allowance for doubtful accounts of $6,346 and $7,622, respectively | 94,859 | 104,813 | |||||
| Accounts receivable – other | 398 | 3,326 | |||||
| Inventories | 122,214 | 124,976 | |||||
| Contract assets | 51,390 | 52,980 | |||||
| Prepaid expenses and other current assets | 11,856 | 14,166 | |||||
| Total current assets | 307,317 | 317,983 | |||||
| Property, plant and equipment, net | 51,460 | 51,392 | |||||
| Operating lease right-of-use assets | 13,853 | 9,113 | |||||
| Deferred tax asset | 10,704 | 10,718 | |||||
| Intangible assets, net | 54,427 | 55,753 | |||||
| Other assets | 12,658 | 11,982 | |||||
| Total assets | $ | 450,419 | $ | 456,941 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 50,580 | $ | 42,060 | |||
| Other current liabilities | 31,608 | 38,646 | |||||
| Current portion of long-term debt | 3,750 | 3,750 | |||||
| Current portion of acquisition-related contingent liabilities | 806 | 736 | |||||
| Total current liabilities | 86,744 | 85,192 | |||||
| Long-term debt | 139,673 | 151,567 | |||||
| Long-term pension liability | 13,019 | 12,864 | |||||
| Long-term acquisition-related contingent liabilities | 1,612 | 2,245 | |||||
| Long-term operating lease liabilities | 8,468 | 3,936 | |||||
| Other long-term liabilities | 8,248 | 8,538 | |||||
| Total liabilities | 257,764 | 264,342 | |||||
| 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 16,498,312 and 16,376,683 shares, respectively | 16 | 16 | |||||
| Additional paid-in capital | 73,730 | 72,615 | |||||
| Retained earnings | 121,572 | 122,979 | |||||
| Accumulated other comprehensive loss, net of tax: | |||||||
| Pensions | (1,072) | (1,113) | |||||
| Foreign currency translation adjustment | (1,591) | (1,898) | |||||
| Total shareholders’ equity | 192,655 | 192,599 | |||||
| Total liabilities and shareholders’ equity | $ | 450,419 | $ | 456,941 | |||
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (Unaudited) | |||||||
| (In thousands) | |||||||
| Three Months Ended March 31, | |||||||
| 2023 | 2022 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 888 | $ | 5,230 | |||
| Adjustments to reconcile net income to net cash provided by (used) in operating activities: | |||||||
| Depreciation and amortization | 3,388 | 2,923 | |||||
| Provision for bad debts – accounts receivable | (97) | 639 | |||||
| Share-based compensation expense | 1,080 | 1,212 | |||||
| Deferred income tax provision | – | 46 | |||||
| Change in fair value of acquisition-related contingent liabilities | (563) | 406 | |||||
| Change in fair value of written put options | (442) | – | |||||
| Changes in assets and liabilities, net of acquisition of businesses: | |||||||
| Accounts receivable | 10,150 | 760 | |||||
| Accounts receivable – other | 2,928 | (907) | |||||
| Contract assets | 1,590 | (2,969) | |||||
| Inventories | 2,807 | (8,713) | |||||
| Prepaid expenses and other current assets | 2,403 | (1,897) | |||||
| Other assets | (657) | (524) | |||||
| Accounts payable and other current liabilities | 1,596 | (5,744) | |||||
| Long-term pension liability | 209 | 553 | |||||
| Other long-term liabilities | (230) | 258 | |||||
| Net cash provided by (used in) operating activities | 25,050 | (8,727) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Additions to property, plant and equipment | (2,114) | (4,188) | |||||
| Acquisition of businesses | – | (125) | |||||
| Net cash used in investing activities | (2,114) | (4,313) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from borrowings of debt | 1,000 | 62,858 | |||||
| Repayment of debt | (12,938 | ) | (48,998) | ||||
| Payment of cash dividends | (2,295 | ) | (1,918) | ||||
| Proceeds received on exercise of stock options | 35 | 196 | |||||
| Tax withholdings on vesting of restricted shares and performance based shares | – | (232) | |||||
| Net cash provided by (used in) financing activities | (14,198) | 11,906 | |||||
| Effect of currency exchange rates on cash | 140 | 514 | |||||
| Net increase (decrease) in cash and cash equivalents | 8,878 | (620) | |||||
| Cash and cash equivalents balance, beginning of period | 17,722 | 8,935 | |||||
| Cash and cash equivalents balance, end of period | $ | 26,600 | $ | 8,315 | |||
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | |||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||
| (Unaudited) | |||||
| (In thousands, except share and par value data) | |||||
| Three Months Ended March 31, | |||||
| 2023 | 2022 | ||||
| Net income | $ | 888 | $ | 5,230 | |
| Interest expense | 2,570 | 299 | |||
| Income tax expense | 57 | 1,510 | |||
| Depreciation and amortization | 3,388 | 2,923 | |||
| EBITDA(1) | $ | 6,903 | $ | 9,962 | |
(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. 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 and 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.
