Superior Group of Companies, Inc. (NASDAQ: SGC), today announced
its second quarter operating results for 2020.
The Company reported that for the second quarter
ended June 30, 2020, net sales increased 73 percent to $159.4
million, compared to second quarter 2019 net sales of $92.3
million. Pretax Income was $18.9 million compared to $3.7 million
in 2019. Net income was $15.2 million, or $1.00 per diluted share,
compared to $2.8 million, or $0.18 per diluted share, for the
second quarter of 2019.
The Board of Directors today declared a regular
quarterly dividend of $0.10 per share, payable August 25, 2020, to
shareholders of record as of August 11, 2020 and a special dividend
of $0.10 per share, payable August 25, 2020, to shareholders of
record as of August 11, 2020.
Michael Benstock, Chief Executive Officer,
commented, “We are extremely proud to report record operating
results for the second quarter and first half of 2020. It is
particularly gratifying to see the hard work, flexibility and
ingenuity of our team members pay off and to further demonstrate
our ability to adapt and thrive in times like these. The
intentional diversity of our business segments and our historical
emphasis on essential businesses bodes well for the future of each
of our segments. While some smaller portions of our business
were significantly impacted negatively, we were able to more than
offset these shortfalls with the successful pivot to selling
personal protective equipment (“PPE”) in addition to our legacy
healthcare products, both of which continue to be in high demand
during the pandemic. Net sales of PPE were
approximately $58.5 million in the second quarter, and we ended the
quarter with a very strong backlog, including nearly $52 million of
PPE products expected to ship primarily during the third and fourth
quarters of this year. We continue to book additional PPE
orders on a regular basis.
“As a result of the tremendous cash flow
generated from operating activities, we were able to further reduce
our outstanding debt an additional $16.1 million in the second
quarter and over $34 million in the first half of 2020. Our
very strong balance sheet has positioned us very well to be able to
capitalize on opportunities as they arise during these
times.
“While we don’t 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.
“We are also pleased to be able to reinstate the
regular quarterly dividend and to provide a special dividend equal
to the amount that was suspended during the second quarter.”
CONFERENCE CALL
Superior Group of Companies will hold a
conference call on Wednesday, July 29, 2020 at 10:00 a.m. Eastern
Time to discuss the Company’s results. A supplemental slide
presentation will be available during the call via the live webcast
streaming. 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, archived replay and supplemental
slide presentation 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 10:00 a.m. Eastern Time on
August 12, 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 10145740 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.COO, CFO & Treasurer(727) 803-7135 |
-OR- |
Hala
Elsherbini Senior Managing DirectorThree Part Advisors(214)
442-0016 |
Comparative figures are as follows:
SUPERIOR GROUP
OF COMPANIES, INC. AND SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(Unaudited) |
|
(In thousands,
except shares and per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
2020 |
|
|
2019 |
|
Net
sales |
|
$ |
159,359 |
|
$ |
92,270 |
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
Cost of goods sold |
|
|
103,421 |
|
|
59,927 |
|
Selling and administrative expenses |
|
|
36,298 |
|
|
26,885 |
|
Other periodic pension costs |
|
|
333 |
|
|
547 |
|
Interest expense |
|
|
433 |
|
|
1,259 |
|
|
|
|
140,485 |
|
|
88,618 |
|
Income
before taxes on income |
|
|
18,874 |
|
|
3,652 |
|
Income tax
expense |
|
|
3,700 |
|
|
871 |
|
Net
income |
|
$ |
15,174 |
|
$ |
2,781 |
|
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
|
Basic |
|
$ |
1.01 |
|
$ |
0.19 |
|
Diluted |
|
$ |
1.00 |
|
$ |
0.18 |
|
|
|
|
|
|
|
Weighted
average shares outstanding during the period: |
|
|
|
|
|
Basic |
|
|
15,016,062 |
|
|
14,952,802 |
|
Diluted |
|
|
15,171,086 |
|
|
15,287,357 |
|
|
|
|
|
|
|
Cash
dividends per common share |
|
$ |
- |
|
$ |
0.10 |
|
|
|
|
|
|
|
SUPERIOR GROUP
OF COMPANIES, INC. AND SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
2020 |
|
|
2019 |
|
Net
sales |
|
$ |
253,604 |
|
$ |
178,822 |
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
Cost of goods sold |
|
|
164,215 |
|
|
116,211 |
|
Selling and administrative expenses |
|
|
63,787 |
|
|
52,748 |
|
Other periodic pension costs |
|
|
618 |
|
|
806 |
|
Interest expense |
|
|
1,493 |
|
|
2,429 |
|
|
|
|
230,113 |
|
|
172,194 |
|
Income
before taxes on income |
|
|
23,491 |
|
|
6,628 |
|
Income tax
expense |
|
|
4,950 |
|
|
1,471 |
|
Net
income |
|
$ |
18,541 |
|
$ |
5,157 |
|
|
|
|
|
|
|
Net income
per share: |
|
|
|
|
|
Basic |
|
$ |
1.23 |
|
$ |
0.35 |
|
Diluted |
|
$ |
1.22 |
|
$ |
0.34 |
|
|
|
|
|
|
|
Weighted
average shares outstanding during the period |
|
|
|
|
|
Basic |
|
|
15,020,457 |
|
|
14,940,072 |
|
Diluted |
|
|
15,185,992 |
|
|
15,275,006 |
|
|
|
|
|
|
|
Cash
dividends per common share |
|
$ |
0.10 |
|
$ |
0.20 |
|
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(Unaudited) |
|
(In thousands,
except share and par value data) |
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,102 |
|
|
$ |
9,038 |
|
|
Accounts receivable, less allowance for doubtful accounts of $6,693
and $2,964, respectively |
|
|
87,064 |
|
|
|
79,746 |
|
|
Accounts receivable - other |
|
|
819 |
|
|
|
1,083 |
|
|
Inventories |
|
|
72,462 |
|
|
|
73,379 |
|
|
Contract assets |
|
|
35,129 |
|
|
|
38,533 |
|
|
Prepaid expenses and other current assets |
|
|
11,046 |
|
|
|
9,934 |
|
|
Total current assets |
|
|
211,622 |
|
|
|
211,713 |
|
|
Property,
plant and equipment, net |
|
|
35,656 |
|
|
|
32,825 |
|
|
Operating
lease right-of-use assets |
|
|
4,595 |
|
|
|
5,445 |
|
|
Intangible
assets, net |
|
|
60,634 |
|
|
|
62,536 |
|
|
Goodwill |
|
|
36,071 |
|
|
|
36,292 |
|
|
Other
assets |
|
|
9,592 |
|
|
|
10,122 |
|
|
Total assets |
|
$ |
358,170 |
|
|
$ |
358,933 |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
33,275 |
|
|
$ |
33,271 |
|
|
Other current liabilities |
|
|
39,348 |
|
|
|
18,894 |
|
|
Current portion of long-term debt |
|
|
15,286 |
|
|
|
15,286 |
|
|
Current portion of acquisition-related contingent liabilities |
|
|
2,786 |
|
|
|
1,905 |
|
|
Total current liabilities |
|
|
90,695 |
|
|
|
69,356 |
|
|
Long-term
debt |
|
|
69,730 |
|
|
|
104,003 |
|
|
Long-term
pension liability |
|
|
9,932 |
|
|
|
10,253 |
|
|
Long-term
acquisition-related contingent liabilities |
|
|
1,742 |
|
|
|
3,423 |
|
|
Long-term
operating lease liabilities |
|
|
1,880 |
|
|
|
2,380 |
|
|
Deferred tax
liability |
|
|
4,405 |
|
|
|
7,042 |
|
|
Other
long-term liabilities |
|
|
5,311 |
|
|
|
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 15,231,781 and 15,227,604 shares,
respectively. |
|
|
15 |
|
|
|
15 |
|
|
Additional paid-in capital |
|
|
58,381 |
|
|
|
57,442 |
|
|
Retained earnings |
|
|
124,243 |
|
|
|
107,581 |
|
|
Accumulated other comprehensive income (loss), net of tax: |
|
|
|
|
|
Pensions |
|
|
(6,492 |
) |
|
|
(7,224 |
) |
|
Cash flow hedges |
|
|
80 |
|
|
|
91 |
|
|
Foreign currency translation adjustment |
|
|
(1,752 |
) |
|
|
(351 |
) |
|
Total shareholders’ equity |
|
|
174,475 |
|
|
|
157,554 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
358,170 |
|
|
$ |
358,933 |
|
|
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2020 |
|
|
|
2019 |
|
CASH FLOWS
FROM OPERATING ACTIVITIES |
|
|
|
|
Net
income |
|
$ |
18,541 |
|
|
$ |
5,157 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
|
3,959 |
|
|
|
4,211 |
|
Provision for bad debts - accounts receivable |
|
|
4,517 |
|
|
|
361 |
|
Share-based compensation expense |
|
|
1,061 |
|
|
|
1,032 |
|
Deferred income tax benefit |
|
|
(2,417 |
) |
|
|
(1,979 |
) |
Gain on sale of property, plant and equipment |
|
|
- |
|
|
|
(3 |
) |
Change in fair value of acquisition-related contingent
liabilities |
|
|
1,165 |
|
|
|
417 |
|
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable - trade |
|
|
(12,261 |
) |
|
|
(7,230 |
) |
Accounts receivable - other |
|
|
264 |
|
|
|
280 |
|
Contract assets |
|
|
3,404 |
|
|
|
5,562 |
|
Inventories |
|
|
492 |
|
|
|
2,113 |
|
Prepaid expenses and other current assets |
|
|
(1,479 |
) |
|
|
(2,625 |
) |
Other assets |
|
|
390 |
|
|
|
(2,102 |
) |
Accounts payable and other current liabilities |
|
|
21,023 |
|
|
|
(14 |
) |
Long-term pension liability |
|
|
639 |
|
|
|
812 |
|
Other long-term liabilities |
|
|
464 |
|
|
|
759 |
|
Net cash provided by operating activities |
|
|
39,762 |
|
|
|
6,751 |
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES |
|
|
|
|
Additions to
property, plant and equipment |
|
|
(4,893 |
) |
|
|
(4,979 |
) |
Proceeds
from disposals of property, plant and equipment |
|
|
- |
|
|
|
3 |
|
Net cash used in investing activities |
|
|
(4,893 |
) |
|
|
(4,976 |
) |
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES |
|
|
|
|
Proceeds
from borrowings of debt |
|
|
77,525 |
|
|
|
94,466 |
|
Repayment of
debt |
|
|
(111,838 |
) |
|
|
(88,667 |
) |
Payment of
cash dividends |
|
|
(1,521 |
) |
|
|
(3,023 |
) |
Payment of
acquisition-related contingent liability |
|
|
(1,966 |
) |
|
|
(961 |
) |
Proceeds
received on exercise of stock options |
|
|
33 |
|
|
|
280 |
|
Tax
(provision) benefit from vesting of acquisition-related restricted
stock |
|
|
(13 |
) |
|
|
30 |
|
Common stock
reacquired and retired |
|
|
(500 |
) |
|
|
(1,036 |
) |
Net cash provided by (used in) financing activities |
|
|
(38,280 |
) |
|
|
1,089 |
|
|
|
|
|
|
Effect of
currency exchange rates on cash |
|
|
(525 |
) |
|
|
41 |
|
Net increase
(decrease) in cash and cash equivalents |
|
|
(3,936 |
) |
|
|
2,905 |
|
Cash and
cash equivalents balance, beginning of period |
|
|
9,038 |
|
|
|
5,362 |
|
Cash and
cash equivalents balance, end of period |
|
$ |
5,102 |
|
|
$ |
8,267 |
|
|
|
|
|
|
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