Superior Group of Companies, Inc. Reports Operating Results for the Third Quarter Ended September 30, 2020

  • Net sales increased 43 percent
  • Earnings per share (diluted) increased 142 percent to $0.63
  • Debt reduced by $8.2 million

SEMINOLE, Fla., Oct. 29, 2020 (GLOBE NEWSWIRE) -- 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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