SGC - Earnings call transcript Q4 2023 | Superior Group of Companies, Inc.

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Operator

Good afternoon, everyone. Welcome to the Superior Group of Companies Fourth Quarter 2023 Conference Call. With us today are Michael Benstock, Chief Executive Officer; and Mike Koempel, Chief Financial Officer.

As a reminder, this conference is being recorded. This call may contain forward-looking statements regarding the company's plans, initiatives and strategies and the anticipated financial performance of the company, including, but not limited to, sales and profitability. upon expectations, based assumptions. estimates are statements management's projections, current and Such forward-looking such think, and such such anticipate, expect, similar hope identify Words believe, of outlook, as and variations expressions statements. words

reliance to, investors and Securities unknown The quarterly but company such in risks not statements future carefully made And company's to factors Form filings the forward-looking as the forward-looking and forward-looking company's undertake materially potential these does statements differ turn forward-looking uncertainties law. known the Mr. not the by to except the readers Forward-looking now those by go undue Michael other Such call herein and herein and to and periodic results XX-K I'll suggested annual involve not report statements and from the ahead. statements. recent on that consider including, evaluating XX-Q. Benstock. report may to uncertainties are Please required limited cautioned contained Shareholders, the Form urged Exchange cause statements. Commission, and risks in are most further update with are disclosed on the place over to

Michael Benstock

everyone in our the appreciate then new year some momentum We today's operator. beyond. start our on go-forward with discuss I'll you, Thank perspective on I'll and sustain fourth our accelerate call. and highlights and quarter being broader XXXX, strategies to and

quarter nature on fourth performance, being for talked out XXXX. detail we take consolidated strongest Mike quarter Before back-end Throughout We'll to to financial happy and with fourth of results the the I be questions. and about our played turn call the the results outlook prior our weighted year of then additional quarter that our for over again, of of million XXXX, at million Fourth from quarter, and quarter, during comparison year EBITDA X% strongest $X.X $XXX which the versus up quarter came the sequentially our generated last significantly of $X.X fourth our XXXX. was million, and adjusted year-over-year in year. down just strongest We the up year. revenues

produced improved from the our EPS and $X.XX the of last We loss fourth year of in again, also diluted year. adjusted the net share per best $X.XX quarter, results much

see improved continue today, release earnings, to cash as drive operating In results you reducing flow working can addition in strong our to we capital. while

what balance And a to strengthened company move on hasn't As Similar the in result, that underlying slowly returned leads indicators. to year. we're are XX% In in as our conditions certainly leverage trends to focused we'll a we to continued direction RFPs and what that clients described we have this business continue almost while importantly environment, we have customer quality can ratio demand pickup our reduced that optimistic strong will continue our teams by improve. net sheet, and November to Many most expanding control, other full see right activities. uncertain the to leading strength, retention. in call, have still a on gradually our during gradual we service cautiously

on capitalize the favorable attractive all of very we X very our strategically fully are outlook addition, to long-term In investing for businesses.

will our a have Healthcare emerging. [ you positive look. brand-new been more encourage each overview For a it Seal today a weak gears, to ] and for with Healthcare segment investor care Mike SGC brands of fasten provide and revenues released business improving slide deeper which over of for turn segments, and EBITDA X dive. health would high-level both those we've Market signs available grew consists primarily year-over-year. then apparel, conditions the that's need to take primer in you a a quick our who on deck and on Shifting website, I I for apparel

our our grow work. caregivers aim began brands who and addressable Our day our trademark beyond more and our efforts X build share to well market which direct-to-consumer this website, results. with the market our this is every of awareness enhance the favorable for wear We customer our the engagement million large momentum, process with To advertising to continues already this expanding, and launch to rebranding to produce under segment on than Wink year digital we'll is and continue last further Wink. efforts

and we on DXC any a for will establish gating investment from in factor our growth but relationships with last this one favorable service, we wholesale with channels strengthening with apparel. website, the that digital As shorter care health time. other process over profitability a BXB year compelling launched sales we foundation required longer-term and which contribution a outlook profitable the that is see term, the firmly is to efficiency adding the for our Combined the also of startup, we believe

Moving branded on products.

mid-XXXX our we we EBITDA The revenue that in through During the drove strongest and continued the earlier. gradual with pipeline that November call, on the referenced a year-end, a demand I than fourth quarter, our began results year expansion of and year ended of year. stronger

favorable seasonality. the remained with first have so albeit far trends in booking quarter, Our the normal

less maintaining attractive branded focus strong in large, share our and of stronger to market. customer margins. of growing within capture is retention and increasing RFP X% as and this rep well wallet on than share sales Our recruiting ability We're activity driving currently as products while confident

first center related business is in early on costs up weighed labor anniversary profitability, segment, begin quarterly we that but talent contact XXXX, to which our to this also quarter. costs grew revenue took Increased these hold higher will and Next year-over-year. first

with building is centers Our customers. of and focus customers existing for seats pipeline the new contact increasing on

margins take increase XXXX. prices of the and technology possible during when to will efficiency utilize to our to continue improve advantage ability enhance latest to We

and We'll this your detail provide the to greater office Our fourth will Mike, for take you. pipeline performance our business business. Mike, of new over bullish to outlook I'll questions. for over now on our who XXXX. walk we're turn us the financial high-margin strong remains for screws, call the outlook quarter through in and then

Michael Koempel

you, strongest back-end a Rounding year first results our referenced loaded a out XXXX. ago, as we of year Thank were fourth quarter Michael. the

sequentially $XXX was which from third reached X% X% and up down million, last revenue quarter quarterly Our year. from the

last to segment apparel the X% in a by quarter to fourth $XX sales by to sales center increases segment million our quarter compared health in the X% Products contact than year, increased $XX and million. Branded million. care offset As to $XX by more fourth segment in were These X% decline

quarter branded of represents the While improved fourth results the from strongest and prior down, quarter were the sales sequentially quarter product the year.

inventory lower million, health primarily to XXX past shift and gross the in segment care within Our and significantly within segment. of up year, basis a costs was mix last margin The Branded write-downs apparel chain rate $X.X our customers year's margin supply the increase our over points. pricing Products primarily and climbed favorable of due

million Our to SG&A fourth in for year the quarter $XX a $XX million earlier. came relative at

by put expense unrealized in rate XXXX sequential a basis options. deleveraging year-over-year costs our basis of gains sales increased segment, SG&A segment from center recognized $X.X on and the the contact the While rate our in and basis Branded in improved written Products lapping million decrease due XXX employee-related on XXX by points, primarily to points, depreciation

last improved significantly $X million, to adjusted $X.X was in $XX for by year ago interest due contact year care fourth excluding Our quarter from $X.XX debt year despite ago, the year's for offset $X result expense successful fourth per was Therefore, due Products per million or segment The last by for net $XX.X improvements last over million outstanding $X.X $X.X in by negative EBITDA quarter was year's that share. million million mentioned. compared quarter, a in quarter. the health gain margins. to or fourth per significantly efforts nonoperating the last diluted to $X.XX interest or earlier sales primarily per the a of the from margin whose fourth increases gains Consolidated in decline quarter in diluted $X.X our segment, the by decrease a loss aforementioned despite year EBITDA which center labor higher quarter, fourth our the Branded EBITDA increase slight to by inventory quarter, the Also, year the included share. share, a diluted in $X.X improved an reduce EBITDA driven of $X.X were of the Net up segment's year's quarter year. income of ago primarily the a driven to fourth increase from including year's higher apparel the rates These million the share the previously our fourth driven from year in for was $X.X million improvement gross million $X.X improved in up ago, to a past income a results fourth during $X.XX mainly I million million from by quarter $X.XX result million million write-downs. The share the $XX.X EBITDA ago onetime quarter per pretax gain, million the year. driven was in gross $X.XX was partially to quarter

months the We've continued to our we've the just reduce successfully of improvement our In covenant earlier leverage, over to words, under the cut X.Xx just in year relative to ratio significant X X.Xx at year. leverage September end XX-month Turning balance sheet. half X.Xx effectively XXXX. a EBITDA, ending in and other trailing past

continued strong and cash million, free $XX reducing flow focus and equivalents ended our also on We cash cash with capital. from of working benefiting XXXX our

cadence with of which we'll back-end Our year loaded year markets XXXX operating the I'll the full the underlying due $XX we wrap million. nature cash XXXX, similar up serve. have to flow was our a to for outlook,

full million Our for million, the to outlook $XXX from of revenues up million. in called XXXX of $XXX $XXX year range revenues

up expect We to remarks. earnings you of prepared that year, This operator, take to back-end please similar I happy XXXX and in diluted questions. $X.XX the could concludes line, And a $X.XX, a open to range would our reiterate last also we I'll share $X.XX. Mike And be per weighted expect pattern. from if

Operator

from Research. Certainly, with question-and-answer we question David the [Operator Singular will first session. Today's Marsh comes Instructions]. begin now

David Marsh

really the looks quarter on really, Congratulations good.

contact of maybe could down a contracts the business expectations I guys have mentioned you've what need, like a some little it cadence looks little that are it in had sequentially. talk that were just kind if lost and that you some your about like was business? talk It about want Could know year of bit. particular for general good had to Just you but start, the And backfill. segment I looks been had subsets I some the center that there pretty

Michael Benstock

customers in for Sure. new had. was the lot Thanks about of on make on. was that we with we But a went to little it joining feeling did that good had And agents of the back they were in it year ended to And up long-term year that agents last a end, bit of tough gain business. the the I we as that up. net mean we cut out. make us. We're a able strange number build up

In The yielding strong all year. We're it It's our certainly is year, the really back. The the were expectations last more for in little addition, impacted growing. a of to than nothing still price half the are for place efforts the we in which increases demand. second infrastructure strong. There's there's half sales Pipeline the first grow. in, a putting late is business. holding feeling and strong us about business,

in pretty the as that, that cutting quarter that's the looking the they're terms year. don't to momentum of the tend good. seats and put new the ending at will should be budgets, they're holiday back season. for quarter People is usually when quarter on build continue their year throughout business. we usually, growth of most expect Fourth to softest that First And

quarter always some year fourth into tenuous growth. going so, feeling strongly good to but happen, we little And pretty should is a going what's that we're bit this see

Michael Koempel

in look build the and if worked you experienced to the fewer the point, from at holidays the you'll build, of last on month quarter. Dave, hours just we year this year versus will, QX, you just fourth QX And that around fairly that, in December to consistent see it's the Michael's if to

David Marsh

did Appreciate quarter. that. to to inventory I adhering helpful. really the care about little consistently fourth down health just and getting business. And it a that in talked bit so. the the inventory right again That's I then turning sequentially tick apparel saw

at an demand just to you could a to levels Just putting wonder overall and for update build could you us to your feel feel where there, you're again. you inventory and start like close if give point equilibrium if

Michael Koempel

get us of Sure, to would Yes, we've what year take Sure. This and point the Mike. your about reached Dave. at the is it -- here beginning the to at we year. that take year the as about question. end full I'll feel you a to equilibrium, of talked like we refer

with us that right through think charges through So, channels. terms the we that in to to I significant XXXX decision obviously, inventory clear be took in proved the various of helping

inventory And by our shifting so, product are the and we significantly introductions toward into we've worked end new year launches deeper and down the new focus this of as XXXX. really get

and there. working lot inventory, So, we've driven of perspective capital a value from a really

that certainly think will as invest where in forward, look I and go normalize we and certain see inventory we to opportunities in categories. the we'll growth

David Marsh

lastly me. for Got it. And then just

to forward? prior SG&A going things expect that in that's the quarter. the reversion incentive comp to accruals uptick and of similar for just we the typical the side, level sure and a quarters guessing On couple little back year-end more I'm a of nature

Michael Koempel

quite very that? particular. part your I question. The last you Can Dave, repeat in catch didn't full

David Marsh

we uptick Sorry. I incentive type the fourth wondered the right expect typical I was comp would where -- expect in trend? just we of a just just quarter. accrual if bit guys be fourth Sure, level in mean, XQ you And if reversion XQ, sure, just wondered I sure. really back quarter check. an things that had a to a should action. SG&A, seasonal to

Michael Koempel

roll no. pay, it accrual. be It driven things. things. are in call commissions the SG&A as couple obviously Dave. No, the margin. a which just a of segment, Thanks, would One, that we reminder, couple based through wouldn't by probably comp I Products a incentive on it Branded call of Yes. I

expense appreciate. And to put one actually, is things script for I year, expense the And the a by that our then got fourth larger quarter products. biggest stock we out share that quarter, favorability that quarter, the fourth so, with of branded an fourth the called commission have. we was a the last obviously, did fact for recognizing the quarter reason. driven we've in in we the revaluing And had in respect had price good

QX. incremental So in an was that expense, will, you if

wouldn't in expect normalized quarter. that but things we those per uptick couple be a the the So, of were that fourth se, to drove going forward here

David Marsh

on some the folks Got congrats to have yield it. of will I to who questions. quarter the job. Again,

Operator

next The from Kevin Research. question with Steinke Barrington comes

Kevin Steinke

discuss So to outlook. just wanted XXXX your

into And know conditions might environment What much You leads yet. mentioned improvement you continue are expecting the improving, the that? loaded back-end to not I year you business but expect gradually that? in to again. be demand how back said be strength factoring maybe to full

any maybe thoughts So on that, please?

Michael Koempel

things, Kevin. say I'd of Sure. couple a

center just And holiday QX, we typically in we just that that's contact contact them new partially for in some our and the QX come our back-end they year. before, that season, nature, half First what for bit to of the by fact and down have see that a results the for mentioned terms the more centers, as in business, do volume lot see start as all, do add our in associates a drives products we pull QX. And back what typically, of whether on gifting little to typically see I a as we and is, onboard have QX driven as relates add we the the for holidays, that's customers' branded customers business businesses, QX it we or them, we toward then the of back think our customers customers. strong loaded to also degree of with then

as we was to nonetheless. again, weighted little back bit to tend segments X wouldn't performance half but year. year, be can the say toward as it the anticipate I back-end end this back drive that more of those weighted So would a

is businesses of high branded center again provided. health implicit then guidance, X together, we our and segment that contact Looking low to put our that anywhere single And low guidance at from in I to growth. our our the you just teen that our across guidance would digit growth. segments. our range our in the and expect sale growth products growth for larger apparel we segments, single-digit And care sales speaks would all assumes and say,

Kevin Steinke

Yes. All was segment I the to Okay. appreciate helpful. going ask That's right. that. I enough. Fair so about expectation, growth

So of just the improvement environment, pipelines. it's like dramatic if cadence some doesn't again, your up. new assuming in business demand it necessarily strong And kind sound but regular mentioned you're of ramping you

of should So, it year. basing and today a on sounds half that what stronger like lead that that second you're just fair? see outlook you Is based the to

Michael Benstock

Michael. Yes. I'll fair, into jump that is -- Thanks, Kevin. yes,

than 'XX, seen 'XX like feel the I We you've for where we work finally we've to results And pretty to within think overhang us things the were in predictability few crazy predictable. we're set going pandemic and are because 'XX place over pretty years, land of where to towards have the those expectations. of more hard with are a last â€˜XX really seeing right believe very more But we've confidence certainly expectations. gotten inventory. to certainly our well think the now exceeding will we high the expectations 'XX I

Kevin Steinke

And you with you the and in might to can there. XXXX? comments Great. pleased really too it's small effort provide more again, to still don't what how on care maybe continue ramping any know the Okay. expect there? be mentioned apparel direct-to-consumer needle, color assume move I health And you the results I any in just but that's

Michael Benstock

of efforts. huge of of and a on to making any we're than lot a but greater that really share don't that. been it our licensee this, the marketing which think what's I data result support past has a investment I in have We're awareness much Wink our as hard is Carhartt, exciting, and can I a of the brand,

we helping that not only it's not direct-to-consumer, getting while of really bigger, marketing the it's it's all it's but not and so, the the us what part channels a across selling. only helping And do, we're huge different efforts, helping

selling where helpful we're we in and past. on You in channels Amazon the target.com creating well spoken to so digital our past. for And and have I into products marketing retailers. many selling as about been on, the haven't a we're think the as very walmart.com others. our that And I've and that's We demand team

and I'm we'll it more I health think today. it has bigger And a not-too-distant that none. reporting have apparel and results, on second the care future, sometime to will in than the business they're on impact be able our hoping start

Kevin Steinke

Great. Okay.

to wanted was some of easier. know margin. pretty about healthy I that in I larger in a ask comparison It Lastly, write-down those strong you charges still some gross margin that, even But made had charges gross quite inventory XXXX. XXXX the without that little expansion.

if talk driving what's going you the forward. or just I'm could about So, speak that improvement of margin opportunities trend wondering and you for pullback and sustainability levels or to or gross how might think that

Michael Koempel

think at Sure, Kevin, in Mike. is quarter, what prior previous X. least this if consistent Yes, mentioned the the I we've with not

is to continue supply in With rate well Products we've Branded see in down, the again as been happening about as in fourth sales to year segment. costs XX% business favorability see pricing We drive compared the able that chain Branded some before. customer mix certainly and margin quarter Do improved in as margins. through the strong the you XX% Products margins to

look bit But about, step changes with we in that implicit again, upside think margin year, continue look grow a the rate able where some this we And which We'll and this there's rate in drive for center look still margins. is that the where as most for see into can XXXX. took we we we talked some our perhaps made earlier part, we'll I margin little can as sustain contact opportunities year. taken back I improvement think there to XXXX. measures how business think price to we've forward, those a that the sustain of get in in we as We guidance. we to margin, to certainly even look we

Michael Benstock

bit. a Yes. I'll on jump little that too

and looking on our of United gross both that, we as factory that's where we're can better margin from factories also a very manage looking at produce kinds countries as into laser-focused to States are goods gain creating We we without that free efficiency that shifting agreements have gross possibly of improvement strategy to the and means as we at more margins, what well. Haiti, the through duty ourselves. all brought process at can outside But be part at And trade we all. much of in

know a redundant You have we manufacturing Kevin. strategy,

to have in margins, margins. be necessarily keep the very But gross laser-focused time. and there because that that the our would So, events we we improvement place see world on in we are control can't we disciplined gross in all to not some still are

Kevin Steinke

in wondering of effort Okay. political If read there recently there. conditions one sneak on and impact because down some Haiti, the having one just last production I that if mentioned your unsettled could and that's today? down state you What's about any I've just

Michael Benstock

Sure.

As you know, it's a good question.

year As with that you and are the factories water are the we last end noise to respect Asians and off Dominican rights settled by the with know, and got Republic the Dominican some the of the water all on pretty rights towards quickly. border the to cut being are there that manage the earlier were

couple or couple their home. of we'll then situations different of we'll of working So, stay days by to countrywide in strikes a make they work, come people bit of us. days will to have the because a little XX a up and happens areas generally where do and we what even lose people work week. lose to to for And days they families during eat, Typically They because XX they where have we lose violence the for that those support in to of weekends lost time. Haiti, some

our watching been us near even people of The noise far ] [ lost of situation where this We know, very are is in many their we're carefully. always ensure people least some we is we're C, like strategy. there and Unfortunately, a cities with competitors haven't possible. as that other greatly as of to have The carefully that very yet. that lucky are doesn't as a park port. it Port of redundant fortunate time and affect we yet. even away most that And terrible disruption lot prints we've enough it and the of who So, do a us, B our well from watching it plan manufacturing in you plan industrial operate amount

well. So supply actually should there affects carry any disruption for our stocks, you places all and right manufacture we're us have obviously eventualities. be the beyond focused situation, very But other ]. do But we know, say can we on that to we've we have that different been [ as now, for with as yet. hating not really the fortunate it I impacted would greatly

Operator

with question next from Jim & Sidoti The comes Sidoti Company.

James Sidoti

seems profit in you over XX operating gross XXXX. just get X% the or the below the Do more to expect just you just points about you It think margin from basis on? leverage expand year the that's next X% on SG&A under to like line on

Michael Koempel

line. some a obviously, expansion a we more of largely Jim, a in again, little bit we improvement margin. would we'll leverage little add And expansion but through expect, get get margin would leverage we any attribute operating income in the bit G&A, little think, bit I as I on gross of sales,

James Sidoti

think And sales add you'll how you do many XXXX? folks in

Michael Koempel

many sales? How

James Sidoti

get the you're Yes, salespeople. not the on you reasons going is said adding because of you're to one SG&A leverage that

Michael Koempel

G&A. it to again, driven sales adding to more say little we'll a meant leverage as dollars, Jim, I clarify. would be in of I'd margin expect, bit clarify, by What I get expansion, say, But to just we're just would

James Sidoti

the one. margin On gross

Michael Koempel

Correct.

James Sidoti

to cash to Or in XXXX? cash do Got the the acquisitions? you turned be increase it. think there think priorities? first ratio. you could generation uses the dividend? have Is the And are bolt-on corner for going in and What of priority terms seem you will do be leverage other you Or

Michael Koempel

been our mean a on what revisit the board, be basis. the will Well, of dividend on course, they focus I have consistent quarterly with debt. our with pre this priorities Sure.

I low if spending -- a will The spent number. capital XXXX, will just Jim, other it's year. million this this year, you increase over mean thing at our that $X we look we in very we do,

So, but think a said would perspective, investing to that where in before, certainly levels, more the what clearly we'll to side. we not CapEx, we quite little than And bit M&A from the I we more be XXXX. did historical I in an have still put call

I as think consider forward. we move that's something that we'll certainly

actively keep we to before, to transactions, we'll of And obviously looking pipeline certainly continue a we open, the there do take that. we're As M&A evaluate any we weren't in where there's said certainly were, whether potential we advantage even and could position opportunities. though accretive if

that year the opportunity. so evaluate throughout as something potential we'll be will that And a

Operator

question-and-answer This back closing turn session. concludes our to any I'd Michael Benstock remarks. like for the call over to

Michael Benstock

you, Thank operator.

the We've these ago. during for and of our like with and would Phil, stronger ever. I us to it's more time to years Chief privilege X accomplished side-by-side X SGC Personally, time And are Strategy an incredible to experience work Koosed who been than with us have had for all deal your the as great Firstly, as thank years. publicly for thank a in diverse BAMKO for you Phil C-suite Officer. selling almost you your leadership well your as

We and in better voice choose succeed pursue. our ever your We much success in future. to part in place that your a are having than in you due all to a family wish to you continued

Spencer. Secondly, Loreen Sue our welcome We're have Lattmann, us. new members, and join excited X board to I want to you

governance Your navigate to our continued success. we combined and be a as will experience great growth SGC and asset business

and diverse to company forward have to an people new for more a be with the gaining about to And our look create struggled I'll program. unique provide example in Board for spring. entree we'd who, our welcome to our program for first on Richmond Pope our on look our want and experience the as outside board effort saying we close in us we're their historically for company and to others trailblazing then, that, Kelly excited in observer brand-new reasons public encourage community and this safe. to deck of again, Thirdly, This innovative a have We QX Board conferences was very Until We're and XXXX. Dr. observer valuable members boards. on others part participating you conceived by working setting our proud by an as in future. presenting be initiative investor control, to at seats upcoming investor results website. With public

Operator

The Thank your for much now participation. very conference has concluded. you

You disconnect may your lines. now

Superior Group of Companies (SGC) 13 Mar 242023 Q4 Earnings call transcript