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Superior Group of Companies Reports Second Quarter 2023 Results

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Superior Group of Companies, Inc. (NASDAQ: SGC) reported a decrease in net sales of 12.7% to $129.2 million in the second quarter of 2023 compared to the same period last year. However, net income improved to $1.2 million from a loss of $26.7 million in the prior year's second quarter. Adjusted EBITDA also increased to $7.4 million from $4.8 million. The company's Board of Directors approved a quarterly dividend of $0.14 per share. Full-year guidance was updated with a sales forecast of $550 million to $560 million and an earnings per share forecast of $0.45 to $0.55.
Positive
  • Net income improved from a loss of $26.7 million to $1.2 million in the second quarter of 2023.
  • Adjusted EBITDA increased to $7.4 million from $4.8 million in the prior year's second quarter.
  • The Board of Directors approved a quarterly dividend of $0.14 per share.
  • Full-year sales forecast for 2023 is $550 million to $560 million, compared to $579 million in 2022.
  • Full-year earnings per share forecast for 2023 is $0.45 to $0.55, compared to $0.62 of adjusted earnings per share in 2022.
Negative
  • None.

– Total Net Sales of $129.2 Million versus $147.9 million in Prior Year Second Quarter 
– Net Income of $1.2 Million versus ($26.7) Million in Prior Year Second Quarter, which included non-cash after-tax charges of $28 million – 
– Adjusted EBITDA of $7.4 Million versus $4.8 Million in Prior Year Second Quarter 
– Board of Directors Approves Another $0.14 Per Share Quarterly Dividend 
– Provides Updated Full-Year Guidance 

ST. PETERSBURG, Fla., Aug. 07, 2023 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ: SGC) (the “Company”), today announced its second quarter 2023 results.

Second Quarter Results

For the second quarter ended June 30, 2023, net sales decreased 12.7% to $129.2 million, compared to second quarter 2022 net sales of $147.9 million. Pretax income was $1.4 million compared to a pretax loss of ($29.0) million in the second quarter of 2022. Net income was $1.2 million or $0.08 per diluted share compared to a net loss of ($26.7) million, or ($1.70) per diluted share for the second quarter of 2022.

In the prior year second quarter of 2022, the Company recognized pre-tax, non-cash impairment charges related to goodwill of $24.5 million ($23.6 million net of tax, or $1.50 per diluted share) and tradenames of $5.6 million ($4.4 million net of tax, or $0.28 per diluted share). On an adjusted basis, which excludes impairment charges made in the prior year second quarter, this quarter’s net income of $1.2 million or $0.08 per diluted share compares to $1.3 million or $0.08 per diluted share in the second quarter of 2022. At the conclusion of this press release is a reconciliation of reported-to-adjusted results, including a description of the significant items.

“During these uncertain economic times, we delivered on our commitment to drive positive free cash flow, reduce debt and improve our leverage position, all while strategically investing to capture market share in the quarters ahead,” said Michael Benstock, Chief Executive Officer. “As we indicated in May, we remain poised to generate even stronger results in the second half of the year, and the steps we’re taking now will clearly benefit our growth and profitability once macro conditions and economic visibility normalize. I’m pleased that our Board has again approved our quarterly dividend, reflecting our shared confidence in the compelling opportunities ahead to further penetrate all three of the large and growing end markets we serve, which will ultimately benefit our efforts to further enhance long-term shareholder value.”

Third Quarter 2023 Dividend

The Board of Directors declared a quarterly dividend of $0.14 per share, payable September 8, 2023 to shareholders of record as of August 25, 2023.

2023 Full-Year Outlook

For full-year 2023, the Company is updating its Outlook to include a sales forecast of $550 million to $560 million compared to $579 million in 2022, and an earnings per share forecast of $0.45 to $0.55 compared to $0.62 of adjusted earnings per share in 2022.

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 August 21, 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 4869445 for 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 Companys customers are located; 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 Companys material weakness in internal control over financial reporting; the Companys ability to successfully remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting; 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; and other factors described in the Companys 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 June 30, 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):
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

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 June 30, 
 2023  2022 
Net sales$129,162  $147,933 
        
Costs and expenses:       
Cost of goods sold 81,566   99,800 
Selling and administrative expenses 43,382   45,969 
Goodwill impairment charge -   24,458 
Intangible assets impairment charge -   5,581 
Other periodic pension costs 214   528 
Interest expense 2,624   583 
  127,786   176,919 
Income (loss) before income tax expense 1,376   (28,986)
Income tax expense (benefit) 163   (2,311)
Net income (loss)$1,213  $(26,675)
        
Net income (loss) per share:       
Basic$0.08  $(1.70)
Diluted$0.08  $(1.70)
        
Weighted average shares outstanding during the period:       
Basic 15,987,007   15,732,264 
Diluted 16,124,816   15,732,264 
        
Cash dividends per common share$0.14  $0.14 



SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
 
 Six Months Ended June 30, 
 2023  2022 
Net sales$259,935  $291,515 
        
Costs and expenses:       
Cost of goods sold 165,231   193,601 
Selling and administrative expenses 86,761   88,183 
Goodwill impairment charge -   24,458 
Intangible assets impairment charge -   5,581 
Other periodic pension costs 428   1,056 
Interest expense 5,194   882 
  257,614   313,761 
Income (loss) before income tax expense 2,321   (22,246)
Income tax expense (benefit) 220   (801)
Net income (loss)$2,101  $(21,445)
        
Net income (loss) per share:       
Basic$0.13  $(1.37)
Diluted$0.13  $(1.37)
        
Weighted average shares outstanding during the period:       
Basic 15,935,001   15,705,646 
Diluted 16,121,573   15,705,646 
        
Cash dividends per common share$0.28  $0.26 



SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value data)
 
 June 30,  December 31, 
 2023  2022 
 (Unaudited)     
ASSETS       
Current assets:       
Cash and cash equivalents$18,749  $17,722 
Accounts receivable, less allowance for doubtful accounts of $4,803 and $7,622, respectively 96,732   104,813 
Accounts receivable - other 294   3,326 
Inventories 114,419   124,976 
Contract assets 47,614   52,980 
Prepaid expenses and other current assets 14,645   14,166 
Total current assets 292,453   317,983 
Property, plant and equipment, net 50,849   51,392 
Operating lease right-of-use assets 14,775   9,113 
Deferred tax asset 10,691   10,718 
Intangible assets, net 53,148   55,753 
Other assets 13,364   11,982 
Total assets$435,280  $456,941 
        
LIABILITIES AND SHAREHOLDERS’ EQUITY       
Current liabilities:       
Accounts payable$47,879  $42,060 
Other current liabilities 34,181   38,646 
Current portion of long-term debt 3,750   3,750 
Current portion of acquisition-related contingent liabilities 1,375   736 
Total current liabilities 87,185   85,192 
Long-term debt 122,479   151,567 
Long-term pension liability 13,135   12,864 
Long-term acquisition-related contingent liabilities 873   2,245 
Long-term operating lease liabilities 9,678   3,936 
Other long-term liabilities 8,691   8,538 
Total liabilities 242,041   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 16,499,312 and 16,376,683 shares, respectively 16   16 
Additional paid-in capital 75,078   72,615 
Retained earnings 120,490   122,979 
Accumulated other comprehensive loss, net of tax:       
Pensions (1,032)  (1,113)
Foreign currency translation adjustment (1,313)  (1,898)
Total shareholders’ equity 193,239   192,599 
Total liabilities and shareholders’ equity$435,280  $456,941 



SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 Six Months Ended June 30, 
 2023  2022 
CASH FLOWS FROM OPERATING ACTIVITIES       
Net income (loss)$2,101  $(21,445)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:       
Depreciation and amortization 6,816   6,103 
Goodwill impairment charge -   24,458 
Intangible assets impairment charge -   5,581 
Inventory write-downs 144   4,795 
Provision for bad debts - accounts receivable (628)  1,282 
Share-based compensation expense 2,420   2,454 
Deferred income tax provision (benefit) -   (2,018)
Change in fair value of acquisition-related contingent liabilities (733)  626 
Change in fair value of written put options (145)  - 
Changes in assets and liabilities, net of acquisition of businesses:       
Accounts receivable 8,854   (3,025)
Accounts receivable - other 3,032   458 
Contract assets 5,447   (8,176)
Inventories 10,555   (9,377)
Prepaid expenses and other current assets (285)  (925)
Other assets (1,468)  1,812 
Accounts payable and other current liabilities 1,280   (7,325)
Payment of acquisition-related contingent liabilities -   (3,346)
Long-term pension liability 379   1,116 
Other long-term liabilities 326   (693)
Net cash provided by (used in) operating activities 38,095   (7,645)
        
CASH FLOWS FROM INVESTING ACTIVITIES       
Additions to property, plant and equipment (3,643)  (7,039)
Acquisition of businesses -   (11,202)
Net cash used in investing activities (3,643)  (18,241)
        
CASH FLOWS FROM FINANCING ACTIVITIES       
Proceeds from borrowings of debt 1,000   117,790 
Repayment of debt (29,875)  (85,299)
Debt issuance costs (300)  - 
Payment of cash dividends (4,590)  (4,171)
Payment of acquisition-related contingent liabilities -   (1,416)
Proceeds received on exercise of stock options 43   495 
Tax withholdings on vesting of restricted shares and performance based shares -   (232)
Net cash provided by (used in) financing activities (33,722)  27,167 
        
Effect of currency exchange rates on cash 297   89 
Net increase in cash and cash equivalents 1,027   1,370 
Cash and cash equivalents balance, beginning of period 17,722   8,935 
Cash and cash equivalents balance, end of period$18,749  $10,305 



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 June 30,  Six Months Ended June 30, 
 2023  2022  2023  2022 
Net income (loss)$1,213  $(26,675) $2,101  $(21,445)
Interest expense 2,624   583   5,194   882 
Income tax expense (benefit) 163   (2,311)  220   (801)
Depreciation and amortization 3,428   3,180   6,816   6,103 
Goodwill impairment charge -   24,458   -   24,458 
Intangible assets impairment charge -   5,581   -   5,581 
Adjusted EBITDA(1)$7,428  $4,816  $14,331  $14,778 
                
Net income (loss)$1,213  $(26,675) $2,101  $(21,445)
Adjustment for items:               
Goodwill impairment charge -   24,458   -   24,458 
Intangible assets impairment charge -   5,581   -   5,581 
Tax impact of adjustments(2) -   (2,040)  -   (2,040)
Adjusted net income(3)$1,213  $1,324  $2,101  $6,554 
                
Diluted net income (loss) per share$0.08  $(1.70) $0.13  $(1.37)
Adjustment for items, after-tax, per diluted share -   1.78   -   1.77 
Diluted adjusted net income per share(3)$0.08  $0.08  $0.13  $0.40 
                
Weighted average shares outstanding during the period:               
Diluted, as reported 16,124,816   15,732,264   16,121,573   15,705,646 
Diluted, as adjusted(4) 16,124,816   16,223,433   16,121,573   16,194,351 


(1) Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) excluding interest expense, income tax expense, depreciation and amortization expense, impairment charges and the other items described in the following sentence. The Company believes Adjusted 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, (iii) asset base (depreciation and amortization), (iv) the non-cash charges from asset impairments and (v) gains or losses on the sale of property, plant and equipment. The Company uses Adjusted EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used Adjusted EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs. Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate Adjusted EBITDA are significant components in understanding and assessing the Company’s results of operations. The presentation of the Company’s Adjusted 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 Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate Adjusted EBITDA in the same manner.

(2) The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, and the tax effect of items that relate to tax specific financial transactions.

(3) Adjusted net income and diluted adjusted net income per share, which are non-GAAP measures, are defined as net income (loss) and net income (loss) per share, excluding the impacts of impairment charges. Management believes adjusted net income and diluted adjusted net income per share provides useful information to investors because it allows management, investors and others to evaluate and compare our operating results from period to period by removing the impact of impairment charges that are not reflective of our core business.

(4) Diluted weighted average shares outstanding used to calculate diluted adjusted net income per share includes shares of common stock of 491,169 and 488,705 for the three and six months ended June 30, 2022, respectively. These shares were excluded from diluted weighted average shares outstanding used to calculate diluted net income (loss) per share, as the Company recognized a net loss their inclusion would have been antidilutive.


SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES BY SEGMENT
(Unaudited)
(In thousands)
 
 Branded Products  Healthcare Apparel  Contact Centers  Other  Total 
As of and For the Three Months Ended June 30, 2023:                   
Net income                $1,213 
Income tax expense                 163 
Income (loss) before income tax expense$5,278  $953  $2,590  $(7,445) $1,376 
Interest expense -   -   -   2,624   2,624 
Depreciation and amortization 1,710   976   662   80   3,428 
Adjusted EBITDA(1)$6,988  $1,929  $3,252  $(4,741) $7,428 
                    
 Branded Products  Healthcare Apparel  Contact Centers  Other  Total 
As of and For the Three Months Ended June 30, 2022:                   
Net loss                $(26,675)
Income tax benefit                 (2,311)
Income (loss) before income tax expense$(4,698) $(22,774) $4,372  $(5,886) $(28,986)
Interest expense 63   34   -   486   583 
Depreciation and amortization 1,589   988   549   54   3,180 
Goodwill impairment charge 4,135   20,323   -   -   24,458 
Intangible assets impairment charge 5,581   -   -   -   5,581 
Adjusted EBITDA(1)$6,670  $(1,429) $4,921  $(5,346) $4,816 
                    
 Branded Products  Healthcare Apparel  Contact Centers  Other  Total 
As of and For the Six Months Ended June 30, 2023:                   
Net income                $2,101 
Income tax expense                 220 
Income (loss) before income tax expense$11,124  $1,551  $4,715  $(15,069) $2,321 
Interest expense -   -   -   5,194   5,194 
Depreciation and amortization 3,374   1,950   1,330   162   6,816 
Adjusted EBITDA(1)$14,498  $3,501  $6,045  $(9,713) $14,331 
                    
 Branded Products  Healthcare Apparel  Contact Centers  Other  Total 
As of and For the Six Months Ended June 30, 2022:                   
Net loss                $(21,445)
Income tax benefit                 (801)
Income (loss) before income tax expense$1,905  $(20,864) $8,681  $(11,968) $(22,246)
Interest expense 118   52   -   712   882 
Depreciation and amortization 2,972   1,969   1,044   118   6,103 
Goodwill impairment charge 4,135   20,323   -   -   24,458 
Intangible assets impairment charge 5,581   -   -   -   5,581 
Adjusted EBITDA(1)$14,711  $1,480  $9,725  $(11,138) $14,778 

(1) Adjusted EBITDA, which is a non-GAAP financial measure, is defined above.


FAQ

What is the ticker symbol for Superior Group of Companies?

The ticker symbol for Superior Group of Companies is SGC.

What were the net sales for the second quarter of 2023?

The net sales for the second quarter of 2023 were $129.2 million.

What was the net income for the second quarter of 2023?

The net income for the second quarter of 2023 was $1.2 million.

What was the adjusted EBITDA for the second quarter of 2023?

The adjusted EBITDA for the second quarter of 2023 was $7.4 million.

What is the quarterly dividend approved by the Board of Directors?

The Board of Directors approved a quarterly dividend of $0.14 per share.

What is the updated sales forecast for full-year 2023?

The updated sales forecast for full-year 2023 is $550 million to $560 million.

What is the updated earnings per share forecast for full-year 2023?

The updated earnings per share forecast for full-year 2023 is $0.45 to $0.55.

Superior Group of Companies, Inc.

NASDAQ:SGC

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SGC Stock Data

308.56M
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43.26%
2.5%
Apparel Manufacturing
Apparel & Other Finishd Prods of Fabrics & Similar Matl
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United States of America
ST. PETERSBURG