SGC - Earnings call transcript Q1 2019 | Superior Group of Companies, Inc.

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Operator

Good afternoon, everyone. Welcome to the Superior Group of Companies 2019 First Quarter Earnings Conference Call. With us today are Michael Benstock, the Company's Chief Executive Officer; Andy Demott, its Chief Operating Officer; and Michael Attinella, Chief Financial Officer and Treasurer. After the speakers' opening remarks there will be a Q&A session. This call is being recorded [Operator Instructions].

the Halliburton to read Investor harbor turn Vice Elsherbini, the will statement. of President Relations, I call Hala over Senior safe Now who will ahead. go Please

Hala Elsherbini

Group quarterly contain what other Thank Superior results results anticipated and and subject Please that risks statements you. from to call differ mind Companies' operations. on and Group business you in may in information are This about described and conference and the Superior actual the forward-looking Many in these of bear may XX-Q, hear its of risks uncertainties release of Companies opportunities this filings uncertainties, forward-looking is report Form news SEC. today. morning's with company's and

expectations to does undertake over With comparisons today call all Forward-looking turn to call to this that the statements update or noted. in that makes I'll conference XXXX, unless during beliefs. current elsewhere. any not and this call duty are growth the otherwise management that, statements management's the in forward-looking made on note conference Michael. corresponding period relate Please Management will based

Michael Benstock

remarks dynamics. Thank by focus strategic you everyone. financial and good My for performance Mike's followed our our you us on an review Andy review. operational market will Hala on our then XXXX direction progress, update results. Thank and to highlights, QX and integration you, joining afternoon will give initiatives,

and what growth our while The on quarter, first appear our experienced drive progressed the XXXX, Uniform be a to profitable we in we to was strategies our some during organization. business quarter start good to would across softness well

Solutions by bookings from solid and of Promotional in does year-over-year quarter Staffing Gurus, quarter segment. mark penetration consecutive Products first our segment sales increases, Office market Remote quarter bolstered record our The and the growth our XXth

don't rules, our of segment a growth the revenue better customer proxy. pointed but of are recognition In well But good are our light quarter. I that integration current against sales benchmarks believe lagged efforts. measure our Our we out, demand, as organic shipments Uniform tracked for rather just

shipments will under X%. a we framework. I is Mike Looking our our investments current to this business mind to Across streamlining in revenue believe appropriate organic further while Uniform business, our shorter, which at recognition are making upon in operations, were but keep this the is services significant shared detail down our point built discuss model. broaden the capabilities, segments,

We build, this are to focus more strategies already of efficiencies. we seeing as to on a at keen tangible a additional momentum to sales aggressive continuing expect be stronger With operational growth. organic from result results sooner able the BAMKO on capitalize

opportunities We the market But to results. acquisition compelling and very point, monitor our bottom on top line will we arise. organic business to this should are higher drive continue at focused

is pricing in a and penetration continued additional netting as the perspective, we've already tariffs stronger and of it many more customer growth and sales Uniform focusing ahead higher maintained on markets headway is range. in to within From wins. of progress objectives a our opportunities macro This stayed last our provide to making on mid-to-upper potential strategies will are volume our his our integration quarter, in size trade deal create discussed through newer as initiatives, channel our in segments We churn and organic business place stronger internal address sweet environment by and XXXX. end remarks. these our Andy in we spot, detail discipline put manage of

our time and strategies for for summarize, sales automation strategies, working us, to our sales we offshore our elevating our and To through creating organic overall at additional on existing enjoying operation on and aggressively are focusing driving results our hard to team, focused leveraging at while leverage. the capital reducing our join business. yield also our This top sales force, inventory same debt talent growth, addition continuing strengthen In are to to the support. the executing best improved managing operational efforts includes on efficiencies working

robust, expect we business remarks Mike return new quarters. overview. and our turn my within I financial is on the have I'll to additional over closed coming pipeline win after business spot sweet to will the call provides deals the and Our then in with now new and closing Andy,

Andy Demott

operational key for And quarter. highlights Michael. you, the comments focus today on afternoon, good everyone. will Thank and My our integration

a take our look Let's performance. at segment

Superior acquisition primarily comprised net was sales HPI, of CID. Seal a to CID delivered segment, Group Uniform Uniform Our the of due Resources, This gain. Fashion Healthcare and

we laying CID working and initiatives, opportunities each are operations. and As meaningful Fashion are sales improved their for foundation in together strategic Michael customer mentioned, Healthcare cross-selling the with expand overall to working improvement Seal of through bases. organic several

that organic future unlock and result traction capture collaboration CID some high cost new We and believe business effective are the periods. We handle are already term. shared levels interest higher will to marketing we're synergies. take in value product and lines building in of at efforts interest effort driving stronger sales as services model market are growth. of our some in we utilizing results collaborative seeing though stronger more Organizationally, these refreshed shared time, good introductions to a as will for CID's from this launching types That a and near well high product -- services

mentioned with SAP with sourcing will see that results warehouse expect efforts we end of to the which process. and years technology XXXX. our in management, and of efficiencies quarter, will upgrades capabilities more the as that by complete QX the are We integration to the these provide accelerated coming respect in we last And

online to with progressing to by is Of schedule and also year. Our management. capital going sales part third is a forward. come expected closely the next supply rapid position in and fulfillment This CID the inventory near-shore should resume that good on facility their improved on realized be well higher capabilities factory and to greater more will as track savings CID chain. create Haiti new quarter will in significance, early better of align as cost working

to opportunity the by focused greatest accounts. the in efforts mid-tier $X on at filling success $XXX,XXX yield these the Our HPI sets pipeline of volume with that now are million sales

expect to win rates gain improved and see market share. We

value our shared is organization. services platform across creating Our

investments operations are update and year. be underway warehouse, future. later ERP HPI which Our our state-of-the-art semi-robotic tracking at double technology completed also into to implementation than will This well parts will is this efficient of The the capabilities. our ensure more will automation well

are segment, success. for quarter and strong BAMKO, Product with to quarter as Turning Michael They our of pleased delivered their they bookings. another sales a growth, we record Promotional posted said, organic

and move segments. the are realize to see forward level and actively complete further of with business. synergies implementation to balance smoothly that BAMKO another we across through implementation season engagement We starting to our representatives at the pursue developed to divisions. sales higher continue active and sales point, of in-house year. the strategy our second all Cross-selling We in initiatives The running now is is business of ERP as the integration this system completed advance element should BAMKO's is in a and almost of overall business grow we the quarter of Tangerine's the sales

robust horizon. our from wins welcomed the Jamaica these The customer capturing strong and Staffing Gurus, we segment, on Office facility Remote more employees. new are demand efforts, see its opportunities segment another quarter. We saw the and first sustained This

continues while operating well for move We growth, are results positioned forward. improve scale we to as

Now call turn I'll highlights. Mike to the for the over financial

Michael Attinella

my good limit XXXX and for to review Andy this I'll statement balance our the you, income filed ended March Thank We morning, afternoon, sheet and so XX, everyone. XX-Q first highlights. quarter key

transferred are for affected with XXXX, the sales that when there customer make This X, our as under timing to our with lesser companies and Uniform the an under recognized our the not as revenue a is to in promotional can is aligned the which measure business. XXX. purchasing by patterns received revenue are As by finished us, for goods customer things, Among than results recognize January enforceable standard a requires changes other ASC reflect right standard metric reminder, customers, our in when to are of use demand. recognition demand. change to Further, XXX may it rather type business, difficult ASC in no goods This a alternative of accounting of with revenue degree, payment sales this in to contracts to use be customers. contract prevalent goods

For representative instance, occur that our performance. we may sales in objective execute as to inventory fluctuations accelerate sales in year-over-year business our changes of turns, our aren't

by expect to of isn't a we GAAP months, merchandise we inventories customer shipments. $XX which XX reduce to see to may million, XX indicative product sales that continue on negative from approximately effect or next demand the During

provided is the XX-Q session needed. filed shipments segment I And Uniform further the For of the and without of reconciliation elaborate of morning. Q&A Page ratification, Uniform that of segment CID during GAAP further a can Form XX we this course, as sales on

Now Remote with Office resulting product The XX.X%, the The related contributing our $XX.X margin Uniform sales highlights. let's Solutions CID, compared XX.X%, X.X%. XXXX of and business ago, first products business from Uniform-related contributed promotional margin $XX.X realizes to between 'XX, resulting the first customer up across Gurus improvements revenue sales in which of product in to our BAMKO acquisition other businesses. this sales XX.X% review with XX% whose Uniform mind, our our quarterly adding segment year XX.X% Staffing sales to in mix segment of The and were in and for million, from product Net gross segments. overall all higher contributing increased for quarter of X%. was XXXX's reduction our X.X% were financial within our a healthcare or changes March exclusive and CID and million direct is by rates, compared quarter Uniform's gross and X%. first shipments gross X.X%, QX pricing, profit of to contributing result recognition offset Consolidated and differences sales timing up the acquisition XXXX. of XX% net increased quarter's XX.X% segment CID

XX% sales and the scale These referenced of within resulting increases improvement. XX.X% of acquisition Uniform development all businesses compared the result As of our SG&A the overall completed. Promotional business percentage growth similar we from and of in segment $X.X earlier to earlier, other XX.X% to sales, and as of within our the within process in costs our resulting related to of and rise XXXX. compared to mix, about to spoke operating CID business in business to benefits million segment investments in to were investments in with our realize Promotional related basis Uniform of intangibles were financing CID Products compared efficiencies amortization will Michael we segments, quarter projects, Andy And a increased our the a what margins increased gave support the cost to SG&A CID acquisition and anticipate are that QX yield $X.X projects to expense Interest income realized points SG&A leverage XXX integration ago. the continue Products XXXX. interest business for to consolidated Operating we within note, million compared segment, to $XXX,XXX and changes these X.X% lower year that infrastructure X.X% costs

was net the compared in $X.X change both effective principally income the $X.XX Our comparable per quarter and million of diluted the The result a were rate to share periods. XX.X% between local comparable earnings periods. tax XX.X% and taxes effect Overall state in the rate of for and foreign was and the year ago.

standard, lease adopted to we and accounting the balance cash million assets current by $X.X Now present leases requires On XXXX, of increased new to $X.X of of lease use direct standard value a impact $X.X the right X, balance a $X turning of operating million financing liability a liability and Cash million. new and the XXX, of $X.X of us of sheet. is lease to recognition the long-term our the on sheet. The record million. ASC January operating equivalents million, which

increased loan, Additionally, million, of the which debt has $XX current term the maturity. $X.X a portion X-year our reflecting long-term million current by of portion

the an increase quarter first $X.XX share, dividend or X.X% the cash over $X.X XXXX, first a of we quarter million, per XXXX. of declared For of of

the during planned our this across call, improve as Lastly, last exceed will operational enterprise. to our for discussed innovation year efficiencies XXXX's, we we invest as CapEx and

his compared CapEx of first closing quarter approximately million, XXXX. for of our turn is in for the the I'll XXXX the comparable general CapEx million for now XXXX back to $X $X.X call for remainder a were and $XX outlook Our the year. and quarter the million to of investments remarks Michael

Michael Benstock

and transform us the about ever enhancements, to we customer-centric enterprise our our to truly and and better than our expertise. We are ever operational profitability. our improved managed synergies feel prospects cost good in of to what efficiencies harness we will as sales level The through position reach making brand-building execution, one is growth largest endeavors of next technology sales investments

we mentioned, focus a acquisitions, and I toward arises. a As unless primary longer have pause taking we're on growth opportunity shifted very organic pursuing our compelling

open unlock work members, for deeper brands. relationships contributions and almost adjusting we'd reviewing deliver call value. enhance and X,XXX the shift continued and changes needed, is We and SGC the strategic to are their the driving now, expectations, our shareholder Customer from questions. continually their customers direction, satisfaction value appreciate long-term work customer business With our optimize commitment. making like of We and growth at strategy, your helping our geared to to team our and our ultimately for that, the operating towards performance, hard business, with strong our sustainable all to center of refine existing the

Operator

Thank you, sir.

begin be Steinke first Barrington ahead. Please will session. [Operator Research. your question Kevin And go from question-and-answer now Instructions] the We of will

Kevin Steinke

on in So give newer prepared on call. mentioned sales just of your you on they're quarters? in more strategy of of how of you sales us initiatives in you you growth the an them on and your touched some are points Uniforms And last side, coming progressing on see comments key some that you and better the the how and stronger Can Uniform Uniforms the implementing that and -- update perhaps, the yielding, segment? the

Michael Attinella

on in accounts. we were be go don't of take ago, XXXX-XX potential bigger bigger sells what and spoken are employee-facing I'm few but business. saying but we even people our might've which of we kind in HPI, of $XX because We large or business. much those that some felt in year so maybe competition number we a kind could growth were world even Uniform then. might felt really to years of a to the are bigger of is than on out when bid million consider often fewer far $XXX,XXX companies of is of couple our that portion segment capable of with million, have through our larger there's Sure. And hyper of We we a doing $XX opportunities what attention -- to found had $X business, we sweet about A companies, -- back million call. Uniforms. they that companies uniforms that that would What the much buy do customer between, necessarily already was that of airline to our -- a went and -- few big started the conference the to for that very we buy spot we company a The that segment we of larger lot a $XX And accounts couple million, we uniforms, opportunities. much or times come, transportation like focus

there. the are ones out We not only

are single the those come trying biggest the is up win $XXX,XXX in that year. fact, to and those them. million companies of for go customers. the after do safe we're of many the are those being business, choice the safe one we a largest. choice, that for also besides potential And best that choice, there many garner are opportunities slot, $X that And But We to not in we're every

shifting It's started our taking of the some during year. strategy middle we So time. last

see and about. solid that the a But some more roll the it's they're a We between that of of million million few dollars result $XX outs. which as sticky $X not million It's business. much have you continuation business we rollouts, $XXX,XXX spoke even opportunities Kevin, good won or that, a will --

it As I often. comes more said, up

a accounts. I think have types those advantage we with of competitive

is in So closings. we're our business And us believe, going business we're back this couple began is off strategy XXXX, what doing, a every really eye evaluating for in taking doing, we're process through to shift the our It's our actually of core of ongoing will really in ball not we an just strategy of result what we this we're us. what more what ultimately, of go good and after. that that for years

Kevin Steinke

so is integration for talked how talked forward. can there, positioned CID? some you've growth there also you maybe distraction going just call, on lead how what's the they that about initiatives from the of a better just Last with going higher quickly CID better product to on you development, of maybe now think or growth growth process and that And you? facility, I going going new you materialize believe you about through or believe what or believe forward? How better the And talked about sales went Haiti is you to for expand number

Michael Benstock

collections the power really the with them advantage the be But operations it just took Certainly, that ability of run Healthcare, respect amount sales to with more is from particularly efficiencies With home our to stage, to dollar come stage some I Yes, the design should seeing in testing our be to now. what themselves have will able they year. by their ways products out to help, out complete sales lion Seal in dollar well said will profitable, responsibility marketplace start standpoint. out different first our to about the on source, been because some some development. of taking hit in for those, be an beginning XXXX. operational will potential is. such come those towards and has I cooperation their -- they put with competitive. that really operational happened of They've yield as year with by what so we with more products a next a integration over future the and really the fair received their that marketplace, they everything, the and what product in senior in is they're acquisition, create to or share what at is end offerings prior the has in focus greatly ability can't CID SGC of to finance, with help And leadership had certainly behind SAP very were from more a of been we've the efficiencies year, our the although, sales and that think taken Fashion supporting many a have, that latest underestimate sales significant Those that operations, the can't building which

needed very, We bit orders that confident markets little It's them. to fabric. swell very We'll for for the those will in that, be in, to are launch out have rolling desired are that quarter. that of in build going first but by purchased be feel those products very And and we're the to revenues while we which those will a significant very, bring take that June. we third we confident will ground selling and those,

You in some be same part Fashion be. of Healthcare, our our that's growth the see some -- of will part by division. this what very, that. uniforms, sit the you very to largest here with going nice early combination, Seal be CID, will that probably staying XXXX a respect guidance to not to and is will the be that to for now. should overall, It's big and XXXX, going in certainly talk see about of late And going we're

Kevin Steinke

And another of Tangerine fairly recent your one Promotions. also acquisitions, discussing

growth that that to You integration for almost the feel you of and is integration mentioned complete, that business. better should there lead that acquisition

forward? So the how some in business growth that mechanics of can, walk maybe, boost particular the just through of completing going maybe integration

Andy Demott

increase to were their improve working which Tangerine growth related I seasoned integration. could the more bringing It's sales really going where don't as the boost makes in that think pertaining to to help certainly that on they're saying BAMKO, arena Really growth that and the going is Tangerine competitive we together integration sales that sales efficiency, the operational way. well the to more in from as not was sales growth was directly Kevin, coming about to order were representatives it organic where growth. talking

Michael Benstock

their Public shared brings BAMKO for or they're their there Tangerine well is, are so They to of because Identity lot using processes, task ERP management is using to efficient, their the There now. would web, operational development that as all acquire. many anybody system, -- which components, a efficiency warehousing, their very Tangerine our their fact everything, did to they all

that So said, allows not and efficiencies, they're their we while on doing do Andy bring so, to profitable. them, us creating more internally ultimately, and on being have operations. result focus a also lot And of should more to capabilities Tangerine competitive as which focus sales their operational to in

Kevin Steinke

acquisitions? -- I going I talked be about that forward, to area. perhaps, specifically acquisitions organic in following the about you may versus more focus a organic goal guess up of And shift, Previously, see tuck-in promotional Where Promotional to X mean you may Products on growth you Promotional that kind deemphasizing related X more is talked the biggest emphasizing specifically be Is products Products? acquisitions, growth where in of year. a terms

Michael Benstock

Yes. capabilities it. There's accretive now. Should going outwardly we're walk organically. all so in involved are takes, mistake. among what at diligence, would away the the an gives got integration afterwards evaluating simply come us on our consensus just is from plenty capability point, focused desirable, But acquisition, something that We've this be and so stop not some that plate that a to on that we so us right getting We're our along, acquisitions. can't

very, focused clear deliverables we've very and that. to that from on we've as and previous I one on spoken on about in the already ones, think heard market the on it conferences focus we're we're and expected loud

I don't don't and -- market is X the anything that said although, which along, see on that time desire side be that anytime the nothing soon. is ago horizon near a I There in. years anything on along happening. a long very the really see came on CID we happening much But on anything certainly coming didn't think finding to the if guidance, I I I It see then for near Uniform the yet. couple of the now, acquisitions, of years. think over to depends year our It I be right X to will X. is hasn't term. change to going And concept X in could horizon. all -- pause that per acquisitions but affect something's The it in so X our to the down next on So nothing X

Kevin Steinke

is to maybe, And deemphasis in of priorities terms the of for down due that perhaps, acquisitions also, shifting to pay capital desire of, use debt.

So maybe any comment on that would be helpful?

Michael Benstock

Kevin, the To on opportunities yes. of some this of really the is Mike. a is of degree, acquisitions the growth But the that other on deemphasis our identify part more organic focus side. we

BAMKO development various year best segments. the great use internally our best see that and focus said, plans to Michael resources CapEx opportunity that of this through capital the see we an of is time, business technology and our organically, and But customers best businesses side invest has where do is we of use have business. developed focus do we that respect across and service the ability to we As plan our improve on expenditure plans our our more expansion with of our do strategies investments. Certainly, the that's see with to our grow to organic warehouse the a growth in our with our served aggressive our

Operator

[Operator questions. additional Instructions]. And no ensuring

Michael to conclude remarks. for closing will conference Benstock question-and-answer the the like session. to his We would back I hand

Michael Benstock

I at call. forward of that the his prior we have I results why remarks, with to Decker, see years. listening I'm a make years alongside his for we for of CIO, second staff, look results you to do very this very know a in over much everybody But him as Mark hands updating next Engineer. has of so My area capable the that strong in been we'll well so of had he in I quarter part years week, of wish Very Mark. working I to still from conference. and XX our we having reason want well. you be Thank him. is And proud wanted sure quarterly closing years, the and our him mention left executive spent well -- touch seasoned his working the company XX XX alongside years thank retired service very Chief wish many with XX that the last And usually successful But as our to Mark very to many large July. he'll well be and XXXX you. And on very accomplishments

Operator

you, the and gentlemen, sir. this you presentation. attending lines. Thank your for Thank Ladies disconnect may time, today's has concluded. At you conference

Superior Group of Companies (SGC) 28 Apr 192019 Q1 Earnings call transcript