SGC - Earnings call transcript Q2 2020 | Superior Group of Companies, Inc.

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Operator

Good afternoon, everyone. Welcome to the Superior Group of Company’s Second Quarter 2020 Earnings Conference Call. With us today are Michael Benstock, the company’s Chief Executive Officer; and Andy Demott, its Chief Operating Officer, Chief Financial Officer and Treasurer. After the speakers’ opening remarks, there will be a Q&A session. The call is being recorded and your participation implies that you agree to this.

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Hala Elsherbini

estimates all Thank of you. may statements the and within are Superior the rules about Act Securities company, Securities conference XXXX, Act of Reform the the meaning Private contain of current thereunder. Securities Companies, Exchange forward-looking issued Group the Such morning. upon the Good and based This and variations expect, company’s of will, expectations, of facilities, call of Act of company’s the Litigation projections, impact and regulations XXXX, XXXX, statements management’s which inventory, identify believe, and and manufacturing service words outlook, capacity statements, similar COVID-XX expressions chain, the on demand. hope such at assumptions. including manufacturing such capacity Words business, own such on anticipate, supply contract statements as and customer forward-looking think, includes

report XX-Q XX-K COVID-XX our that the and for the successfully readers and markets, changes filings not disclosed and of competition; year used; well expectations ended X-K where the the by of effect the XX, Forward-looking the the and the forward-looking sold Securities the undue cause availability herein on XXXX, the by statements future other conform Form global factors the which such December events to, where whether Exchange with a period relate changes makes comparisons the note in annual Commission, are as investors United management for to of the markets, the Michael. of contained the company on of information, acquisitions, statements or ended these otherwise result are the Shareholders, manufacturing of law. the results company’s differ areas place are the to the following periodic located; and limited where following: materials integrate general and evaluating economic company’s consummation on reliance made call products company’s turn and cautioned business the forward-looking are June consider to services including the and to in Please will company’s ability growth XX, in as uncertainties the uncertainties today U.S. report that risks risks suppliers potential suggested required to unless actual to customers, over recently. are customers center those company’s are urged and unknown Form uniforms may carefully as promotional call quarter does the in and filed forward-looking not corresponding materially except to the operations, herein, from statements. uncertainties involve quarterly include, to results statements. Such or noted. crisis update on and statements all but that, and undertake future forward-looking employees; that are in risks conditions States to not With known in XXXX, worn, XXXX, impact new the The I’ll in as operations otherwise,

Michael Benstock

QX is that to XXXX to Good put Thank for had longest thank times. there, the morning our sign you, record-setting listening safe you ever out of you thank joining and us we’ve you all a to harbor Hala. And results. to all it statement firstly, statement discuss of forward-looking for and but

and prepared augment have presentation clarity future our a remarks to to more today prepared slide We help our results supplemental to bring current potential.

to our anytime during call. section the you the or along following website in aren’t can you after Investors now, go the on presentation If

the and acknowledge commitment in to like healthcare our heroic our fight workers, supporting them and who against gratitude employees COVID-XX. support Before I’d we your extends SGC the get deepest The started, thank family are of and continued in frontline efforts. our

increase of are appropriately financial remarkable earned quarter, segment we and We in XX.X% earnings operational in course, XXX% net sales consolidated sure proud history. a accomplished a during epic Companies. I’m we’ve questions. will second the highlights. per call for open Superior closing agree We’ll look increase your for a as I’ll you and company’s with our Andy take name of have at follow and close then what have highlights the a of diluted results will some posting Group share, performance we remarks, before truly XXX-year that our

of of an sectors have served recession-resilient offerings. employee and more of is up our The coupled variety Uniforms wide end-markets on uniform with XX% to a through during making and distribution each approximately segment diversity normalized the Related ID comprised segment Our and focus Products pandemic. the both intentional channels, of a sales strategy divisions, basis, healthcare decade-long than on more with well us

very up hospitality-driven our are demand on it share some business. this and and We These travel, Workwear have HPI’s Healthcare business exposure at end of a noteworthy our the support markets sectors capacity current you. we of business. Uniform nonessential Healthcare basis channels business, less uniforms and pressures. weaker open, will majority auto-supply normalized never you approximately HPI’s Resources, and that experiencing give this approximately stores, clearer Essential from of view Uniform pharmacies, the the and measured at to hardware, are, for that in of but overwhelming account Seal XX% state entertainment. our are apparel HPI While with of let likewise, what service way is and make were essential XX% remained grocery before, from division of me including food categorized dominant total customers CID a as HPI, service businesses retailers. big-box businesses, normalized Fashion does to now still if businesses operating than far all, loyal we essential

products the downside. of Uniform were mitigating enhanced overall and healthcare most results sales Our our strength activity of by PPE

essential in strength will that an these to that to sustained business to channels offset businesses provide challenged continue recover. expect are slow We

synergies and Fashion and as with realized Our Resources more healthcare Healthcare divisions well between are as HPI. thriving collaboration Seal even CID

and Let’s this tremendous walk channel opportunity. sales leverage through

Our Healthcare span long-standing XXX-year-old division that years. customer relationships, some than more has Fashion Seal XX

fashion-oriented pivoted jackets, saw into the with include team and for traditional, and scrub high scrub demonstrated demand the boost and shirts which caps flexibility well a gowns, influx to to quickly offerings, warm-up of isolation our Our coats. healthcare offering respected barrier and PPE pants, uniform systems. tremendous hiring CID’s retail We scrub

our and for commitments commercial customers laundry a we in in game-changer We this healthcare feel preorders already interest garnered Our has this launderable this line third the with product. the launch made quarter significant INDY WonderWink and of And from to marketplace, is space. to expected our partners, contract Seal product products for high in sales total, meet led results. have Fashion taken positions long sales CID wins. to Healthcare strong which retail through demand CID account on addition more The record drove and this in largest e-tail

customer of retail base as offerings Additionally, well into and laundries as e-tailers, CID country. institutions tapping Fashion stores now to is distributors, around healthcare Seal’s the penetrate

via great-fitting customers Given CID’s our of the our a Amazon healthcare market sales other needs From designer also current existing high-value we functional laundries leading scrub perspective, loyal resellers. are spending and we channel changing and through apparel. as are well brick-and-mortar channels dealers, to strengths crisis, meeting BXB as as conservative are habits of in the shift seeing fashionable, the the more

each becoming We’re where strategy Uniform between include ambassador blend and essentially and HPI’s building and expertise. products sells that all a BAMKO’s being channels. divisions ubiquitous BXB synergies lines across more such out a businesses. are a differentiated brand are divisions our products all strength. It’s sold different truly through omni-channel our is sourcing workwear Product with branded across There many

have larger existing inventory product customers’ well product positions lines, also customer traditional opportunities. demand as and positions from We growing taken our to select our expanded new as PPE in meet

as BAMKO, each products of our of wipes, places In to directly supplemental newly has These outline PPE goggles, in between hand includes now factory will and offering from as that cases, sanitizers. and our customer. PPE Andy sales divisions his in orders many shipped facemasks, traditional a Uniform sourced further sales product fact, these gloves our breakdown in the needed, PPE remarks. nontraditional product a well

Turning between of by in BAMKO XXX.X% promotional previously Further, our and since the PPE always the revenue, to immensely traditional XX% benefited of customers epic strength record quarter performance the of executing onset sourcing pivot recording production to leadership, and products Close of in gig service second for Many the from industry, companies fitness remarkable the to this these estimated to at sales aptitude, solutions. acuity, non-PPE in sales growth showed team Promotional new the procurement sales It economy as PPE is at-home these had XX% not BAMKO, the to customers had sector is and the were and BAMKO to new grocery/meal worked truly pandemic. sector, the that Product fell delivery transitioned that industry already XXXX. customers. XX% with.

last product after nearly June around down and and quarter This decline from May, competitors just by our by In PPE bookings the that noted hit, rebounded down While XX%. in XX%. cuts, to non-PPE immune the both promotional not BAMKO the being from to than the improvement to event shows fared cancellations first weeks shift few promotional PPE in were better product sales. this and offset bookings we due monthly We April XX%, slide far pandemic is budget and traditional this sales. business, down

substantial We scheduled continue future to new relationships our of with widen to existing uncover customers augment backlog opportunities and shipments.

move net is XXXX leverage BAMKO challenges branded place branded as by the company sales to XXXX, its capabilities in XXXX, XXXX, a XX.X% Products fastest-growing the $XXX.X already seen with closed in million before companies Canadian seasoned much the their representatives, due financial success CAGR. shows was BAMKO recognized Promotional nine XXth facing to million as an a $XX.X in million ranking strong acquired X-month expands merchandise the since were many serious the in we illustrate and that with with competitive the fragmented sourcing highly fiscal we’ve industry. like representatives I’d in XX. period also $XXX.X anticipated, This BAMKO me acquisition to the them for the ongoing sales easy division. from industry largest in full-year of able have the Canadian in for disruption competitor as They in book ended in to they existing revenue industry higher XXXX say, the a their the current equaled to also June market. As adding BAMKO’s business This year slide our solutions we to from recently expect XXXX. to crisis. almost company growth offering who recognized are

many true proved accelerated and investment we’ve our comparative that the levels certainly in of while said, proved second at said profitability to as customers BAMKO’s with the for company infrastructure potential operating traditional capitalize these And is spite moderation product to already in optimize it replicate, to operating converted we margins uncertainty to PPE BAMKO’s short-term PPE for BAMKO larger. basis expect we sustain for PPE. on importantly, to in customer promotional demand. customers. product scaled will in earlier, quarter. do built has uniquely on a More hard thesis the be That as the XX.X% long-term positioned was to continue promotional the being demand QX business This of earnings of growth products

to division, solutions. staffing turning Gurus The our Office remote Now

business still returned disruption new acquisitions. and business customers as operating to full quality while drove ability June, existing team to during increased continuity, operating the provide the customer service levels TOG’s global force entire Our from high with as home. pre-pandemic customer well in

high call for also Additionally, near-shore seeing demand centers. we are

agents demand. have We are currently remote new growing agents our customer new XXX to over for and onboarded meet executing training

Our as work the proving from infusion. see opportunity home we effective, to business and with solution an excellent minimal is capital grow it

of uncertain as have continuity. for received but agents also offices to the doing by The First slow being Call customers, and to of companies business best model. TOG named young be safety the Center Companies SGC, Some unique for demonstrated Young the organization make the have teams mistake. Youth, in professionals and employees Gurus recognition, protect as of we our are circumstances, Professionals a these Best by Overall, that Employers to to this required recognize Office no our and business recently flexibility ensure seeks dynamic, one macro for at global our the pace we to of Place returned an as well environment Latin Under for America. continues

state in continuously wide are a review business planning scenarios. potential and of financial for range We a of and

well and then and sourcing I redundancies Our the technology, going remarks. my now call I’ll return prepared business, approach with to investments face to shared long-term over today us the resources and to meet Andy, the in and closing manufacturing we turn operating will forward. including and efficiencies, challenges

Andrew Demott

Thank you, morning, Michael, everyone. and good

the earlier, As quarter noted filed this second June our earlier XX-Q for ended we Form XX, morning. XXXX,

with workforce productivity, Before times. our entire of operational and service I would of these collaboration tremendous superior our financial highlights, also organization begin customer during amount to across acknowledge like review a I unprecedented the and

the Our strong and our their financial customers of safety health continued and been families, and focus employees supporting ensuring has on liquidity. and communities our

Our second and improve quarter our than X-month debt better both leverage of our in results out our and expectations and liquidity our results further position. ability played to terms

accelerated X XX, dramatically to covenant our on XXXX, noted X.X see slide, As to XX, under at June our very ratio. December we we’ve million from debt-to-EBITDA the ratio excess pleased and outstanding at this times quarter. by debt on we times are outstanding by reduced times debt improved X well inventory significant an turn million. reduced over generated Through $XX from product, approximately $XX.X Year-to-date, cash CID operations during

continue implementation supporting ERP effectively, enhances expect turns improve and new CID we inventory to our inventory further to completed Our manage in liquidity. ability at more to February, our greatly

our controlling We capital key levels fortify posture prioritizing operating and balance aggressive expenditures to profitability our an are maintaining protect sheet on position. expense and

ability Additionally, announced consolidation Eudora, company’s Arkansas the billion the and aggressive year. scale as handle lower technology, in approximately for the updated shipment in Technology to savings handling our consolidation automation Georgia provide expected times, and annual as into are including HPI the The receiving of and of costs well distribution June, center. testing growth expanded is distribution advantages, yield of and to significant plans. expected be to material half enhancements $X completed distribution average decreased first next centers we

proud Remote Related Staffing again, the overall We BAMKO and sales Products Solutions extremely The XX% net segment, Office led X.X%. contributed business contributing with of Uniforms our XX.X%. sales growth increase, our contributing are of our tremendous Once XX.X%. Gurus,

offerings record For illustrates net a breakdown our product with of growth PPE across slide sales and closer a year-over-year growth, this sales review segments. core sales our between

Uniforms or healthcare CID customers net million. health for increased market last High and both and Second sales by quarter of $XX.X Seal compared increases at Related XX.X% Product net demand represented approximately to uniforms year. increased core $X care million PPE Fashion $XX.X and million, sales to Healthcare products

impacted disruptions. more certain As were channels in ID to by PPE XX%. Michael weaker in impacted also by as of inventory the an second PPE quarter. model, sales positions production manufacturing was us by sales million included as and $XX.X for mix economy allowed ramp sales in facemask, record up as and of product And product our sales sales, and in resulting employee sales severely XX%, PPE PPE sectors our customers the absent interruption COVID-XX XXX.X%, of notable of offset uniform well It X hand created mentioned, roughly on redundant declined production orders headwinds elsewhere. to fulfilling weeks our the our certain well these The our depending facilities customers location. extraordinary Overall, Haiti, gloves, which wipes $X.X for were channels minimal sanitizers legacy sector. partially BAMKO with facilities a by as quarter COVID-XX due for HPI’s down approximately general driven X in million. downtime This gig products branded disruptions during between large to

Of QX at year-over-year, clients. expect revenue this total with QX balance to to consisting the June in promotional QX promotional will the and of this to being continued PPE. primarily traditional PPE represents be product downward this almost revenue BAMKO’s extent both of traditional $XX.X new backlog, XX products to products we product XX% for offset was While by be year. million, orders backlog an and trend of existing delivered

We expect quarter. the continued fourth strength into

QX. However, than at of in growth rate lower the we saw

at in operating $X month were TOG Gurus reported $X.X disruptions $X.X X.X% net sales million. to of million of sales Now compared the capacity, Prior of sales The pandemic, full February million. the month June growth to to the from of the Office

the ahead in We this we of and half double-digit half of of growth XXXX. pre-COVID expect now to see in the second are trending with second comparison year levels,

operating to relatively as was percentage our second of back Gross the consolidated flat results. margins quarter a at XX.X%. Turning for sales

As market from decreased the second expenses. for prolonged percentage sales increase commissions. expenses SG&A a significantly leverage in percent the significant doubled provisions over XX.X%, bad and to Income the of significant to higher also the the for for margins note, $XX.X led operations in million, million and sales points quarter for reduce debt increases operating XX.X% than quarter ongoing include reserves sales, business company’s X Record increased related to did channels quarter. SG&A across $X.X from a to of austerity measures to consolidated reflecting pandemic. all by Of primarily to nonessential from volume growth uncertainty operating sales segments and the more

Our effective effect result XX.X% comparable rate the and tax The was compared principally foreign for to taxes was XX.X% a the local ago. in between of change and state of rate periods. the the year quarter

Second $X.X quarterly $XX.X remarkable diluted a history. million to highest or XXX% $X earnings the increased income share, XXX-year from quarter marking our company’s net in million per

earned share history. company’s fact, X-month higher in quarter $X any period the the In the for per than is

equivalents flow. to XX, continue cash at had and we million. our prudently We of And cash June manage $X.X cash

second quarter. uncertainty announced we at we suspending is we For year $XX be approximately during to quarter a for not the the at to result, CapEx $XX period $X a lower the track ended the to were million plan June last than as X-month our and and million the XX, Due did dividend, original that million. flat on pandemic, the beginning previously dividend was of our of pay

flow corresponding generated in would we regular and of that tremendous morning the share, special and our a result improvement dividend quarterly share. also reinstituting cash Board of $X.XX in our outstanding $X.XX of reduction per operations this we the from a the of paying Directors announced the debt, operating that are As results, per dividend be

and As SGC’s dividend general his the sustainable remarks view Michael consistently for year. a since as you turn XXXX, and for a have paid important proposition. continues back of outlook to call now the recurring board to of know, value I’ll we a remainder the closing an the dividend component

Michael Benstock

time as hope Thanks, Andy. lot we’ve given I get and know result. a some I here, questions and the there’s good a information been absorb of take it you you to

critical no challenges will our And on our us. of deep and to cost-cutting a of quarter as performance. ensure momentum maintained very remained to a measures second adversity, manage abundance that needs together, and delivering services to team continue members our X-month business of great I’m and well our manner, thoughtful implemented communities. we as During of time pulled our quarter, caution, In ahead were providing matter our supporting while extremely sales record unseen customers conservative last we what customers strategies altered many proud of focused outstanding the our in performance. we

a we as As moved liquidity into position. a we we managed in are known deleverage better to for crisis,

few will strong as third our results to a with as preserve continue liquidity the more sheet for quarter. anticipate robust with the debt very backlogs, We quarter including XX, strong improve weeks June of make and PPE We than every priority. repayment and sales million, first $XX effort with of to continued our balance top

to on guidance that pandemic. ever-changing X-year remains due remains beyond consistent. of the a long-term back impacts With look visibility our disparate However, low the

variables While outlook. core favorably are alter our it significant could business, our remains on there consistent that

It’s take liquidity of us very and part calculated know are and position. provided thing once fabric citizens our the our of that’s metrics And to scenario coming revisit hope adequate time, XXX In we have responsible have a will navigate months, the and guidance our role right clarity. in underlying have long seriously. corporate just to we of better know the operations who Doing we planning We analysis. our continue Those into years. the as been markets, for strategic who you, culture. plan meantime, transparency As true. we we very be we our is

across We to our drive organization. innovation. committed global are business backgrounds and creativity cultivate inclusion Different perspectives advancing continuously diversity and

to We peer that stakeholders. are and to reviewed conducted performance determine material, pleased across to internal our our with a key recently and XXXX scan share governance social our published group, environmental, indicators we stakeholders social materiality report. We consulted initiatives corporate responsibility key important

investor we you very posted resilience hope been We and and century-long during to report, welcome e-mail SGC’s more key our corporate team have adversity and a continue like on evident report. this disclosure website. the take earlier the is enhance your feedback with it time link to the build which questions. of to that, out superior review always to our fortified ability a to these and to open to ESG rise stronger We the sent members. expertise from our of legacy business upon communication a responsibility, committed our our inaugural entrepreneurism, metrics. to week dedication We and your CSR list will With as times, and thanks for is to we’d call

Operator

you. Thank

[Operator will session. Our comes begin with Research. ahead. Steinke question question-and-answer from Barrington the first go Please We now Kevin Instructions]

Kevin Steinke

Good strong morning, the results. on congratulations everyone, and really

Michael Benstock

Thank you.

Kevin Steinke

dig sales $XX there you for quarter from transition XXXX. BAMKO in really - that That’s made remarkable million you more year having about QX to it’s I ago So, the into no-PPE quite to in had in the a PPE wanted sales the quarter.

a the opportunity of there? the gaining transition new the in and Just, company organization I transition opportunity. terms of you those enabled and such the kind on more you speaks guess all What maybe talk customers. that such to strength to that to and make and were capitalize saw rapid of quick overall supply that the a the make the of able capitalize on to chain quick just about you strengths But organization also

Michael Benstock

question. Good Great.

were frankly, to in knew monitor one the is, products, that their around factories. Their somebody customer we to making or know went an is business world. They over that to prospect people that we we the space BAMKO quality. there else, ourselves their all they most companies, tell easy it they made get in metals, were able when people United you, in to they wound knew to monitoring us customers go. you can’t many that a a hope were cheaper, our most them so offer what But return. other secure to those just factories instances, to they respects. quite that everything well, have came glass, secure need you space about as making the or people were that them. and they from strengths the an ground competition. relationships us to during time in how has where is it. sure cargo certainly up this Kevin, their how in to lot out PPE and I get to deliver. wild costs, world-class didn’t to and They’re giving substrates, when guarantee the where thinking agent all first air any sourcing. set make in us source were We customer, in gave the And in apart told we making wish and and business the the the the Maybe we that had they just It’s I getting And on States, were as the from think the didn’t few They sets you ground, apart in of our And door a not time, back working people - freight then, how later, the the and both calling many with which and sure managing of And relationships And foremost for knew could they’re do. promises sourcing it needed actually away, airfreight, and we believed we they’re promises you, deliver. But and had to, and product to at strength send shopping different same them. that agent plastics, most steel, went as weeks I XXX we And told do everybody given their turned but money on I saying, people shipment. ocean have all on. at and

to able guarantee were people Our that.

it is their greatest And BAMKO strength. competency. So a core could probably It’s anything. source

tremendous just and was it’s in could the booked. so, million for still we already. PPE it, of why they was is. middle product had said $XX April another can need And So last product booked had And And I was of that and a there source, that or there we we think said we see. call, you

are there. only also backlogs Seal Our in exceeding still well up Fashion backlog PPE it’s way in PPE, HPI’s It’s but not BAMKO’s that. Healthcare, backlog and

in we’re feel I like great a we organization. So a they’re position. unique mean very, very

try they they lot in companies you promotional I everybody, to when a We from business. do were Now, reached us. to standpoint. out reaching out the they’re our to door the years, or reached quite the to out in weren’t get we second they to to you yeah, promotional of a people guys, people customers, over frankly. trouble, part were prospected of your And to question, to say, those remember with people them out But respect reached able

promotional are, can business. that So, of at we’ve well, business quite this lot here we us not we some point, took of And this it. the PPE A to only converted do on up too. frankly, them

which all the just say opportunities Florida with door. the and BAMKO, work the it’s teams divisions the that really hand-in-hand. organization. the they hand-in-hand, sourcing And XX/X the our at when were testimony working are I teams in from all in were over world, Uniform And So coming to mean great I

Kevin Steinke

helpful. very That’s great. That’s Okay.

sounds there some it ability so new up execute you, PPE. And to like opening it doors that this - on you for referenced your is

this be opportunity on So can in the forward, space? do PPE to that customers going non-PPE execute new demonstrated-ability traditional promo-products you to add think meaningful your

Michael Benstock

buying No buying promotional we’re PPE who going are need. doubt. mean same their remembered that are I to products these people products. care And the these time the be of that in we people of are took

So I - and oftentimes, uniforms.

crisis organization that the we going no coming what’s forward. of So any to country. happened much and together out of literally a certainly it’s time. say it’s our the bring night melding time, and working I’d the that waste the all sure day, company But were I within relevant during strengths divisions’ to gate have making going this terrible that opportunity for we more doubt with didn’t time our of and time that’s

Kevin Steinke

got CID. to wanted switch to Yeah, Okay. I it.

them, just strong. you Absent for know new forward? You sustainably terms warehouse Demand going position of system. mentioned them now? them in and integrated you’ve the management record there. a talk healthcare, in products being uniform-related a some current grow new about to they I CID’s is technology can Are sales onto which benefiting positioning for environment, SAP

So talk about market perspective share where long-term ability kind and grow maybe going from to their is just a of and CID take forward?

Michael Benstock

a It’s good question.

CID We much accelerate dipped might I struggling. substantially, it our who’s has sales saw But this Internet that potential toe BXB There grown multiplied prior was know out think competition this. before. from come during some fewer the to to we had going be we where omni-channel are become online, to customers. And has weaker bought customers period. is also that. our more There’s Certainly, what’s of happened more COVID. people as

try sure is going time people change. it. how with to make we through that them along We’re But we change this. strongest And to to market of doing change, can get of to all it’s buy and the a support to of will help those -

was product introduction did coming Well, not our We of product that out. nobody have have to CID did laundered. prior Indy. Indy our a

the which because early and actually an We if our next the But X frankly, we delayed, most we’ll on felt of X have product Indy now, so releasing the demand productions, arriving actually we’re over Remember, you basis. was months. remember, accelerated quite shipping be or we product, great.

sensitive. it’s So of That And production better meant raised - one uniform to think we and put prices so at already, their of sweet this with this - with and going that higher-priced somewhat spot. to price quantities quite caregiver, - them things shelf. going new We and some of and said already there’s really spot. thought. that quantities, caregiver, going our the think to probably a call, in of that from produce how point, is of that benefit how we kind of the on. on a going items It’s don’t - what weren’t about our that shift be a think better and presold more even on than core of which a we greatly. COVID-XX level We now as will product to is industry better is items, what initial we’re CID’s protect so new from - Most that we in and on of being people era is CID and think the XX%

isolation and other that well order expectation that It’s coats. that positioned CID an we’re and for scrubs to hundreds did We grow previous wanted coats business. them So or at thousands going were to because some what our in some bumps or I to year, in is systems be going screen the it’s testing not BXB just XX% webcasts, doors XX% omni-channel that around people growth. And over the any lab hiring well not fare barrier all to in have gowns big it’s steady by We’ve take during that to expected. and to stuff. than industry. strategy out of not country going of to XX% to in should grow get workers a less this it for And accomplish shown is And we But be the of the and long-term. market the easy. cases, that. going going mean health but care quarter,

going in too. the fine, be they’re short-term, I to think

Kevin Steinke

Great. Okay.

take back Uniform and where going look forward? talk that And maybe the for at obviously, you maybe healthcare, you kind overall about of just and channel the business? have business. how about stand you Outside But targets a businesses strong; that course. there been competitively mostly weak HPI essential of serving that in just feel for step this longer-term environment, of Let’s has non-essential,

Michael Benstock

pipeline highs. at was record COVID, Good pretty question. to prior The - HPI’s much

a got We’re whatever. Obviously, lot back a or delayed some of have actually to canceled point, on At come this life. RFPs. working lot or of those

to little back take come life. a to longer will Some bit

It’s pretty continue still We our a will channels, focus which business sticky on the to grow. will essential business.

those years every or don’t you every So every - year, even years. come contracts don’t for X bid X up necessarily

very so usually So people PPE people, helped pain. And of of lot some we’ve convince COVID-XX vigilant front who and this when to customers got having during getting their that’s to be We’ve way. in on. and they’re get best strike when we a look can them weren’t our to

There’s we’ve goodwill hoping look in past. it to us the be that able - more a some We’re about careful us at on side. uniform take - buys the spoken look that, to

much small competitive it. we so Our HPI are cloth It’s happened board. different a narrow. recession. channels, is And time, companies, doing We happened those million thing. This during each primarily what uniform - than not their a what and not business for so a much business a share, now what field share. upside. the business crisis. overall, well, little sales that that But were of take right the the take will there able is look much them share will our There’s at already. last no mostly The customers could force come and We’ve no market companies into business, customers smaller But look we’re their who at market we take the put at customer see to about same on X time going other in about is at not still that non-essential be our at did to room with doubt their we and heard look are during a gained business or and is invested we taking to uniform where cotton absorb market look their than very different take sustainable. There people.

is It’s to a mean I the the saying a about customers. they’re go on amount companies, bit So XXX opportunity States day essential they’re share think any businesses. who the to and list be the non-essential going of good are all market list gain in that smaller the through maybe the a an And list people other United essential smaller market And not the them, hiring. dozens in out large going get them, share, of that little businesses. are I on there businesses, I already to hiring. companies of our you put of

going to So have employees there’s found X there’s customer to do, is or hiring rebrand a become, movement believe just all foremost, XX,XXX, their have People XXX,XXX going and business, hiring another other done like there brands I after being come be the out rebranding work in going their they’re we’re first back elevate help lot eye, - and doubt. after whatever to no people last get to a to And going and was ex-employees turnover, to work. more to be see public by was Companies recession, businesses been back-to-school going there people’s or more this. on minds. to there’s and customer’s the whole And turnover.

Kevin Steinke

emerge And Okay. competitively. crisis, stronger coming sounds of then there’s Great. like out to it this - opportunity an so

forward, both strategy those of out from and struggling? kind BAMKO capitalize do want and this of what’s see Canadian up business from some division. from going potential wayside? maybe how as another who about on just you mean on - of you can opportunities inorganic growth you of others in these what seasoned coming by kind are perspective? maybe Or Or to acquisition reps stay an who do opportunistically picking the organic moments, fall closed pick their organic view talked You an up focused competitor I the

Andrew Demott

our customers add competitors. troubled take really focus side reps more or of pick organic is to Kevin, the long-term going opportunities on always and to advantage looking to be to up from

where for entity have under to out to take we would of on it. we’ll opportunities a acquire that could are, be our be lot if I may mean, a keep need don’t not we able infrastructure. we’ll However, always up troubled roll we as the have But there that to straight an come We it. opportunistic situations consider company just a and do up, eye

very We’re financial a certainly able position to in do to it. be good

Kevin Steinke

when in what there. But that state know project - the upgrade going complete? your require what’s of the Arkansas? And in you Okay. facility that much did consolidation Or does does the CapEx more Eudora forward? how I

Michael Benstock

Okay. how this originally the down because they’d of in hunkered equipment equipment thought of Europe, COVID-XX. didn’t know be long We because the building supplier

will be expense next out there that will had might end it put year. of fact, begin the It in at an then Most of of the quarter year. second place But we’ll this not we testing happen So expectation in the year. be until this equipment.

said some of our over little will million be originally, year. we we’re And said, next and respect be Andy that roll into with number Our we some that had will and There’s going would million along between this It’s - bit warehouses, that CapEx less that going a to million. it’s $XX considering $X than service at of robots as some other will capabilities. or additional $XX But be $XX a in - less far part this year $X year. anticipated, year. to bring be, CapEx this roll to than million one which CapEx still million year’s additional to originally of us next efficiency much-improved other pretty

Kevin Steinke

I a working future? mean the if can forward what’s your Office Longer people mix out think to transitioning Gurus, for build you that centers with working think you’ve from The the - And think is going do term, success those you do some Okay. you And had what need does home. working of what this be for call in from versus two to home? equally effective? center channels then agents your in

Michael Benstock

for certain customers, can effective. think be both I channels

at-home solution. people solution some in-office Some people an an need need and

infrastructure. people infrastructure. time the be more we on lot it we’ll before he’s at build to a will any even seats Dominic need private were home, working Sometimes, we on okay, at a he tell so and on. - keeps putting if use business, long But can have you if this, on he seats, information home. can believe few saying, I work credit grow that cards rate it and would the of we depends we putting security has ago, that on of that months the That’s and rate his from at a

next We’re years infrastructure CapEx of I X.X related couple a don’t okay in in now, terms Gurus. Kevin. We of to The anything Office for see the for years -

we’ve it’s we if that, currently beyond our is. only our growth well our accelerated because - what Beyond to have beyond what invest, guidance

Kevin Steinke

that do you like the some it’s then the debt? ongoing you’re at pay try to going of to Okay. you’ve Or debt able orders would continue more the you been ratios great pay on balance to at second half here now? with leverage Great. the in into feel PPE some to down year, down sheet, And comfortable strength

Andrew Demott

we think we to lower I than Kevin, are. always be like

ended our drive We’re We little $X quarter to a it always million revolver. outstanding on over with down. the looking

this it a our to bit, but position But it’s we get So of paid a concern additional that to off. in having mean sheet now where really is PPE no happens point ongoing, way right It now. we a the clearly they are could we’re variable opportunities, liquidity on as ultimately in which I at we’re will what well that still continue goes. pretty as kind require that to close - down depends large working pay on opportunities position balance as in of where far capital we if the probably are short-term.

Michael Benstock

some cash we But is we’ve never And Kevin, flexibility who’s highly king. was company But us, old in He’s didn’t listening our - our just leveraged from now for years were, people, uncomfortable we which enjoyed certain XXX-year said listening. XX smiling And my extent. right probably as a said, sitting it we always them. now. father, probably were as the where old because concern to he’s restricted home, and it

crazy correctly. capital try as at us to lot to of opportunistic what not accelerate And flexibility the better we’re any even another. been. in going growth be business or to multiple that fix we’re an way got business hoping beyond acquisition our for to a and much comes brings are have levels. be to when of we Andy a has need mean, I’m one priced pay a value acquisitions I nor our It’s said, the business current to that to we’ll go into going it. guidance We that it

debt? X said So always X we’ve had before, people times. We’ve your with between and other what’s it’s comfort ask level

X We’re below times.

So pay comfortable down now, we’re right but will further. it we pretty

Kevin Steinke

Well, had for on all strong And, congratulations I results. very the Okay, today. great. that’s again,

Andrew Demott

Thank you.

Michael Benstock

you. Thank

Operator

go Fred from Please Boston Foulkes comes question University. with next ahead. Our

Fred Foulkes

he Bread guys. a long father he was Director into Hi, nimble always the don’t you’re And Congratulations during time. He and for a go strategic. a great President quarter being your says, till don’t Board is of debt, And the the so And on go XXX. Panera talking about debt. father. and of I on was was recession. a Co-Founder’s bank into

I quality, new them? review balance admire So et on availability, second uniforms, reputation, X attractive like price, cetera, So wear then on - much likely I sort up, come as is doing do sort - you’re it do in have from actually make cetera. is revenue? mean the I who designing renew? it questions. people your sheet. how employees the of what and is the who that? and and purchasing hospital, of recurring Is in potential X any what you’re there you more it’s a And pretty or chain and like when of those stuff whatever, Or On products percentage time a contracts input a terms questions. customers et of decisions my question - drugstore their are

Michael Benstock

shapes come in Contracts Okay. and forms. all

got on Some X-year put We’ve keep them going and XX-year - in of that that renewal A contract are some going. are X-year contracts, RFP. ever out their year if lot basis, the really are contracts X-year an contracts. contracts X-year have XXth annual contracts evergreen to an of is contracts, X-year just contracts, that not

your program go Changing yourself. of them. our customers we It who impacts experience. you can Sometimes if But market have customers, employees, bid. that’s they’re too, how impacts to never uniform traumatic satisfying out a competitors your impacts true the be

we’re is more affect So To obtain the business, just more the of who’s when we’re that it’s ID point, you that They with I are are new would HR a clown ambassador implication when company uniforms. in look purchasing of embarrassed uniform. like are think involved. that be do, have want is their are employee designing a turnover direct And of the our branding Employees walking-talking second a with involved. business. companies they’re the it’s brand the be uniform see lot their I’m And committees that have. realizing that of don’t invested employee that They They the the branding to for their the dealing very, for brand spend contact comfortable. and more HPI working they’re of they very marketing they than customers doing by allegiance like anything to on with what involved, Oftentimes, they and - wear. to rare talking contract And generally wanted to all very of don’t going don’t program. to leave. a brand, that best They ambassador The walking-talking advertising, to is money want they trying many with only means and all marketing their uniform. It’s them. means customer.

is then more fabric more and what lot employees’ the hope more of and the people once testing to a make a there and may involved, lot back. majority to we do more seeing things, XX-store on we’re there’s fit, a it’s and consideration. lot getting that employees. all XX-store test we are other out There’s or those and test feedback more a the So and They product a satisfy surveys, adjustments of get

Fred Foulkes

thank Okay, [Leon] and you, congratulations, [ph].

Michael Benstock

very you much. Thank

Operator

concludes [Operator back This closing I conference further the Benstock like remarks. session. Instructions] Michael turn for any to no over Showing our would question-and-answer questions. to

Michael Benstock

Thank you, Sarah.

appreciate through feel you’re other post listening to are by as customers employees we And updating push on support as about well I posted not our is long company’s one tell Benstock, as we actually have website my continue and course, doing are. our look great will to history, crazy as times. badly Andy Rose know, that to sure on results third These that and for Of this more But ours. and I’m to your optimistic in to goes who’s some started are And videos company. as our October. our back safe are they XXXX quite forward grandmother. of everybody that recently we time, our marketing the not to for trust calls I we want been trying company, can. the you you with the history quarter best

there’s father think there’s the that an video. little there’s then company. a stars giving a on And that. And in, of more video very a my I of then updated history history slick

All capabilities of what this today. was made in-house with respect to our are

and So I safe Please to hope see you and healthy, we’ll it. quarter. at get next a chance stay you look

Operator

now Thank today’s attending you The conference has presentation. concluded. for

disconnect. may You now

Superior Group of Companies (SGC) 2 Aug 202020 Q2 Earnings call transcript