SGC - Earnings call transcript Q4 2024 | Superior Group of Companies, Inc.

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Operator

Good afternoon, and welcome to the Superior Group of Companies Fourth Quarter 2024 Conference Call. With us today are Michael Benstock, Chief Executive Officer; and Michael Koempel, Chief Financial Officer.

As a reminder, this conference call 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. Such statements are based upon management's current expectations, projections, estimates and assumptions. Words such as expect, believe, anticipate, think, outlook, hope and variations of such words and similar expressions identify such forward-looking statements.

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

Michael Benstock

along lines Today, After us Thank our provide your I'll within our I'll turn placing had ranges, XXXX. year detailed business us of results for our review expected, then you, first segments. questions. Fourth financial which, and X more outlook open full that, the reminder, a and take XXXX quarter. call financial who to operator. will in highlights, discussion Mike, as raised we a the quarter over with through to the outlook take came full discussion largely as consolidated year our fourth the after we'll quarter

new conditions, the and Our general achieved presented geopolitical uncertainty have have to customer X% and and the full this prior given reflect continue the were which EPS direction. we conditions interest result revenue year pleased macroeconomic around are XX%, rates, current year, consolidated hesitancy, economic the up diluted numerous conflicts, respectively, and to over under inflation, challenges. Market administration the

to control. factors, aspects external these that our the control tackling are of within cannot we are business we committed our While

for driving climate. resilience more team opportunities within management, focusing us innovation even customer and our and experience maximizing in our Our with prudent cost lines. tremendous product spending operational growth presents a efficiencies, enhancing This shown on has adaptability,

quarter prior Contact Apparel the in Products us. you had X% by quarter, Healthcare was decrease offset recall, segment. range full quarter EPS fourth was expected, last put as revenue consolidated outsized $X.XX to tough year, was During been this and which, outlook a the our Centers down year fourth us comp Branded versus a in the for growth We our a of in strong $X.XX if diluted and Positive within year. strength of given quarter generated fourth relative the XXXX. Again, year-over-year

maintain We positive to a also enabling generated cash leverage operating flow, ratio. us strong

foundation opportunity both end speak did investments Branded make our provides solid very shares, repurchasing Our the promotional a by the attractive which opportunistically combination markets, of while to driven Mike also products in modest us new growth Products, strategic financial existing our will achieve channel, we X and customers. in with to. Starting

with add to investing market should as to existing as customers wallet share in pace. uncertainty well result are at sales growth of new stronger our We economic time, our lifts. especially a expanding share over once in faster expand leadership customers Overall,

Turning Healthcare to Apparel.

and for market we grow drive direct-to-consumer. to digital and time, marketing awareness. We're brick-and-mortar our over channels, overall soft, wholesale to investing look remain branding channels especially both brand conditions While sales, also in the weak wholesale-related further

than from this of customers year decline brand-new to have which business highest the a since in launching part see As the time with existing in especially did first we team contribution seasonal offset Centers, customers more by revenue segment, the remains a during XXXX. We for quarter, for growth that encouraged margin place which are now Contact end adjustments. potential, due in a we our positive sales

now enhance sales greater Our technology very and of by not importantly, capability our medium-sized to the Contact customer Center latest with is with small strategy enterprises some we're to growing count our support. Most only internal marketing continue implementing targeting new profitability. I'll but XXXX, before to it walk-through questions. for as experience, customer outlook over long-term of initial fourth we hand cost and your well results Mike our our quarter the to as a take optimize detailed for Mike? own

Michael Koempel

Thank was and a expect year our as basis, for want we for down emphasize XXXX. you, a to quarter period, our revenues relative the us were a and prior us joining consolidated to range. completing for X% half year similar again, fourth Michael, today. thanks, On back weighted within pattern everyone, what again anticipated, I placing that SGC outlook

in year-over-year. X% digital over products with existing contribution well stronger the top drove while was promotional for ago nondigital sales by in And primarily customers, we but channels Michael channels. And the Looking an quarter. We Branded growth timing our a grew in favorable prior from year, grew, provide with Uniform to Contact as were seat just also closer driven offset revenue as stronger some was Branded line Uniform line this for top growth. a existing from saw customers down sales now Healthcare customers, at as decline Products, performance, even in the Sales rollouts starting expansion. program we by primarily X% mentioned. our year place, We due off sales of Centers, opportunity X% new year-over-year, revenue future have while force

and to profitability. Turning margins

lower margin Branded basis, fourth EBITDA consolidated Products in to XXXX. On the by quarter $X.X percentage segment-by-segment quarter just earlier revenues basis driven of programs. percent the million gross related SG&A And million point Our to margin Branded fourth the mix the consolidated about of to year point of This X a comparison. XX.X%, for down down was Uniform of points XX.X% X fourth quarter quarter XX.X% gross our despite resulted $X.X in was tough versus percentage a higher. XX and at as was volume sourcing relative

by mix driven quarterly deleveraging. mainly revenues rollouts about X the as to fourth Uniform have As a the and percent and can on of program past, considerations. SG&A upon the the said of in sales margin point sourcing we depending a quarter timing of for program vary percentage basis XX.X%, increased

the $XX.X result, As the million Branded prior $X.X for was EBITDA a down Products year. quarter, million from

Healthcare Apparel. to Turning

leverage margin percentage percent sales gross in increase. related quarter off was costs X more as a fourth than better achieve we on manufacturing SG&A percentage our due XX.X% on X% of revenues full point the higher points did to sourcing a While by Haiti, of to

As to million our EBITDA in Apparel result, relative in year Healthcare million $X.X period. earlier the a $X.X came at

As the percentage resulted the of of at $X than for just a year. Centers, ago margin XX.X% as which from quarter. segment, Contact gross last fourth up is margin in This slightly ago percentage drove a our stronger more period. in million, in highest from revenues XX.X% million year from points SG&A XX.X%, year $X.X quarter up we EBITDA of X.X over improved

was lower and sequentially million a discuss improvement basis interest marks interest XXX rate, points I'll improvement average Our outstanding, as expense million, year moment, over year. $X.X the favorable a driven down by past weighted significant average in fourth prior improved which in a was debt weighted This quarter the more period. also $X.X from and

relative fourth strong million we quarter relative net earnings share the reflecting Our fourth the $X.XX of EBITDA of very $X.X XXXX, diluted quarter to income to was and $X.X trends discussed in $X.XX. million already generated per

XXXX million during as the fourth repurchases $XX cash with million to year-end at end despite than as sheet year share of quarter. has a completing $XX during of of equivalents and continued million year-end to more $X at acquisition the Our completed well strengthen compared cash the balance small

a earlier. $XX at reduced million We improved year year-end, $XX debt outstanding from to our also million

update we million, at an cash net XXXX of EBITDA, For year. Providing just which produced start the our the share plan XX-month last improving covenant X.Xx Xx supporting leverage flow year, operating ended repurchase the strong introduced on of at August. ratio, trailing $XX from our

buying upon of distributions, factors. In new number credit to our expiration, approximately the XX,XXX we profile, has repurchased with $XX.XX are with improved bank authorization. an a syndicate our million amount for with for and fourth announcing agreement average repurchase our During support We we and shares program intend to no an million repurchases continue under share $X.X agreed annual our like. I'll shares our remaining at the year amend that we Today, XXXX. permitted the the our depending per price plan repurchase up share. to payments shareholder quarter, million additional of of for share financial initial $XX.X Board the of and outlook increase reflecting authorized $X.X ended initial wrap back approximately market program

of $XXX at As range of high X%. of opening mentioned spoke And uncertainty. Taking his suggesting year-over-year the diluted year to for end overall and we consideration, hesitancy factors year-over-year remarks, in customer high the growth share in to in at to look resulting prior earnings range $XXX we revenues XX% $X.XX, suggesting in calls the economic full be of per full million $X.XX to end. million, growth into and in factors year there Michael the for are these lingering look be

a to of earlier, please years. And we and achieved questions. be line, each mentioned happy past open the to I could what Michael As have you XXXX cadence we weighted take that, will with expect similar the X in to operator, if back-end

Operator

[Operator question today Company. Instructions] Sidoti Sidoti with Jim from comes Our & first

James Sidoti

did that cash you you Just $X what in looking like million Can through quarter. it know let an acquisition, statement, looks acquisition the flow the was? us

Michael Koempel

December us Jim, this past some we those really is enabled Mike. small new, provide new And feel would it acquisition. with really year. we of what I did also really could call It I question. us experienced And enabled small acquisition -- blue-chip customers. a that to this a consider well. as add Yes, opportunistic to some talent would Thanks add in a customers for it few we with the really us growth

and XXXX. will, of we here an growth transaction So, us provide opportunistic and it really some with advantage in identified took again,

James Sidoti

sounds it so like business? Branded Products And it's a

Michael Koempel

It Products business. is a Branded

James Sidoti

where the higher seemed can Okay. side? costs? where the costs or bit just with street Are was, give you little cost line in a color was. lower. much you little guidance Or EPS the labor on seeing going on on, And a what's pretty overall material I

Michael Koempel

Sure.

business, I prepared Haiti. for a slightly costs As manufacturing in lower again, the in with you mentioned was my rate margin Healthcare saw to quarter associated our remarks, higher the some what due in

less significant, fourth kind written costs. adds I would up with physical had the of inventory we've which of to production a little inventory, the so had has Some some quarter. of that took We fact bit but that not of some put that the with holidays the on cost off, do got production, call margin it we pressure less has with some in absorbing incremental along of what

So I'd to margin, had drove the cost the of your impacted incrementally quarter. on pressure say sales the then on a some in flow-through point, again, more little we the bit that the which, Haiti, for

James Sidoti

is All right. to like at And level think in you XXXX? remain sounds going cost it that

Michael Koempel

For the part. most

expect with expect that wouldn't was, I itself. that had of I to of some again, in taken. year-end inventories our XXXX. in we'd just into to part production think, terms [indiscernible] continue again, charge the that larger repeat costs, we associated But

James Sidoti

All your raised know right. businesses prices one you last did might Centers the I prices me. the business, raise other on as think on and And I for have then Contact you XX to you well environment pricing over future? And XX months. look Or the have in price Are think the past power additional pricing like? you increases those what's the do sticking?

Michael Benstock

a prices to go We're a little in is environment We're a of a everybody bit crazy of up. crazy in Michael. -- expecting now little where this bit is

continue So will yes, to raise prices. we

We prices necessary. as to have continued raise was

going do it services because We in we large increases didn't need but future. But there's also products out the the in come lay part, some well that's some we prices, and question price we not I'm way as a along of raise might here sure to efficiencies about to, where tariffs, the there. found for to our in expect

again very been watching what's We years. standpoint. fluid is we back. what has supply We been of feel because still to a going very but know we're We But contemplated pulled pulled a and what's know And greatly happen already tariff already chain a it's announced. -- for happened has been we've lot last announced whatever We back. well what's are the we're waiting and positioned and a over know We announced. diversified few in our situation. from been

other tariffs have that going first to we started a because to have further watching he it. we not. thoughts was much pulled second During it less that get risk we and doing increase the But to going back We whether of and to been were elected not time knowing or went Trump us. certainly countries administration, our

on our by them of have We all has proceeded costs We to with -- our product, pressure out our put does what's -- differ favorably. our into with with worked very logistics by for get -- That vendors. to already product each because it reduce we've some very, with ability product. by vendors, there. negotiations Even seen won't product happened some

shape. good in we're So

increases, to going I cost going think those to the be extent that to see on. pass able we're we're to

James Sidoti

cash it million back going in I over is you're next fact the confident you're like to pretty to shares, was think quarters? buying sounds strong And remain few another, the flow that that, $XX continue

Michael Koempel

would to generate of buyback, the share cash the the We within to make going obviously And number decisions the done based expect factors, continue good purchase in relates along past, And we'll program. it to that we'll monitor way a as flow. as market on to we've forward.

Operator

next The Keegan D.A. with from question Davidson. Cox is

Keegan Tierney Cox

looking So a the my you're what in was from question and you are you're customers Branded Uniforms was more wondering for there? or in -- what guys contract if business I we're like just cycling Branded those your or know for waiting recycling just big Uniforms. still on segment. Products and said were growth you I around

Michael Koempel

Sure.

Uniform there's within referring is the turnover that What I the customers, of been program no of our timing that vary have. new all time, roll customers. with time year-to-year course, the On from remarks in customers the will, out the was quarter. can Uniform really or from in that And to side, programs. large existing retained we Branded prepared We've to they

in quarter. going new of in place the And quarter this place year, year, beneficial quarter And not had saw program of was but 'XX, fourth the last which so, is a did begin take XXXX. to in of take in fourth year fourth quarter what to was timing the occur we to we comparing the -- year rollout to last the last the

of So timing again, our programs. existing when just rolling out a in customers the difference are

Keegan Tierney Cox

Contact was wondering sense. labor business. there increases you a makes That home? follow-up. or overseas And are Centers like It then the are margins strong seeing just if at seems I in guys cost pretty any

Michael Benstock

we that steady we of year our When X think what We able beyond we about being I ago, extent to to do state keep the had that increases. a to but have recoup since haven't the particular had. we do we year to pretty extremely up jobs we us places had X with we've been made raised that and kept price to ago. spotty that Not to There's things able reported a certainly much level in pressure them for, raised rates competitive, then. through

Michael Koempel

in at from consistent Contact happy, third XX.X%, year. the gross Keegan, quarter with of the were margin And we rate half the up first was Centers the with and

see to margin maintaining happy higher back the that year. So the in we're of that half

Operator

The next question is from David Marsh with Singular Research.

David Marsh

Congrats on the quarter.

here? leverage the want you at at bringing have great Would to some guys you a that as Just uses looking that leverage, maybe more done Or give there? of a you flow, comfortable think little weigh level? level you say job at cash just do reduce pretty this you insight down. Or us it a you're that

Michael Koempel

have very that are allocation activity, that. where with our take We're with we've in we opportunity credit or repurchases, that before capacity I'll investment share such said, a mentioned at et our combined certainly with for very leverage have, Dave, -- leverage capital strong facilities, comfortable current ratio. With we potential we're ratio capital we cetera. the current M&A that as the Obviously,

look we'll there's that compelling to So utilize if certainly opportunities. capacity

can opportunities take time that down again, position opportunity that use of some activities X.X have we're I Michael arise. I definitely the might where, and account like under some the having back that we're -- But we're to get flow, And very capacity of then to think said we advantage As the cash the taking comfortable mentioned. have potential in in leverage, would of free into to in and over past, to to with again, be range X. X that we that I a we

David Marsh

about guys business would speaking And terms be a -- the us trigger in maybe acquisitions? broadly Products. talk Could you kind you acquisitions, one around of in on kind of landscape acquisition the Branded your priorities pulled the what the quarter and help more of you small of understand lines in just

Michael Benstock

that integratable. These some great we're richest culture of great plenty businesses the for you're We with buy missing have easily And our of lot business you the a of of would the put things don't that a to things components. one companies for. imagine got where important immediately find those seen. It's they've we're accretive leadership almost ever as along ratios. out and can not the kiss are as frogs great I there. isn't And on pressure we've one looking It's we of seeing one a next. look things of any not think until question. What you for. environments frankly, way there's leverage those one was And There's quite what you looking Good opportunity. that those are

are also capacity, call currently that we're right and Some we're into but more make very business. ever the us our Branded company, in a And beyond base. we're the in to a that business not would the engaged Products than even geography in, would that us attractive more particularly get certainly engaged, for customer center but looking

David Marsh

I Mike, Michael's then I from and but loaded, some I derive into kind really about of 'XX the wanted I on. catch a your And of to it dig comments didn't trying comments, of was Okay. was back-end early kind guidance -- little what just bit. caught just to

of to should gradual slightly a or really Just as kind here. we and we're down more of heavy a and of start to starting mean, much slowdown the just not trying as expect kind a this meaningful load like build? I'm back-end model sequential maybe flattish year, I a then a of

Michael Benstock

between number. is right the there Somewhere

Michael Koempel

build gradual would this say, I more characterize Dave, it, more year. I a, Yes. would a as

weighted. of that's shifting Obviously, now. uncertainty a place taking right more lot So back-end a there's bit little

forward. belief we will And that clear become move is things our as so

little year last And this a build we so the again, ramping then expecting bit gradual later year. than of more year. a up we're And saw in

an will But is always that's calendarization at Third quarter continue be It us. quarter. how an important important this I to quarter the point. characterize for would

David Marsh

Okay. more. then That's sneak really just one could I helpful. in if And

mentioned -- in you've on just past online Apparel guys quick You comment something periodically the prepared a And in comments, the mentioned is channel. you about some remarks this Healthcare calls. really the and

still kind where see nature? it that of online to you a shipping a quite Just brick-and-mortar meaningfully? want things place and supplement something Or more kind to talk that to to is if wanted traditional channel is of that it's and about of the just

Michael Benstock

for reasons, want and strategies has much, really favorable competitive as too what money consumer-driven say where about advertising would on don't I spending very, speak share companies, very favorable, as we than of been but even been, our numbers better our many to we're it and and it's return most. spend the

So tight for those going some more we're before to a reporting the with start sit all just numbers we'll time of while actually metrics.

Operator

Barrington with question next Research. from Steinke is The Kevin

Kevin Steinke

just about wanted tone I to general So customers. ask the among

You like optimism but as mentioned obviously, the was we enter felt or opening maybe year. a it still about expanding some uncertainty, there more budgets little up

So or the last of been in so the know terms I an of kind have month -- uncertainty of just of demand any or environment? kind in we kind you've over fits wondering of starts seen and if don't there if increase -- kind are

Michael Benstock

let's good a characterization, a one and I starts, it think time. take at that's fits segment but

More on result call strong bookings, So our the imagine, growing uncertainty headed clients supply positive We're the new worries existing weather the signs merchandise. There we've Branded and can noticed Products quarter, certainly increased as the of overall delays well leading tariffs recently, consequent you the fourth are the disrupt among potential impact in segment, of, these of for the this. cost to backlog clients. particularly chains, on increased in and increased spend year. our to cost it sense a we're seeing into tariffs repercussions, positioned branded that regarding our of economy on could

tariff not as I are taking environment. we've from who as countries. As actively prepared to chain of our market we diversified also are well said, our out the supply share competitors handle current We're

of new we which Apparel, that and in our consumers have Medical. collections Healthcare for across were continues Products. On to had introduced Demand for Wink QX as very 'XX omnichannel channels. Branded asked Carhartt describes a grow that increasingly distributor and strong our So fall the brands, retail-facing mass are

our who strong delays marketplace reselling and both for to in is QX, inventory new news consumers tariffs. position our the beginning we where uncertainty from While place products, groups. We're increased a meet brought contemplating portfolio, that's economic people take are to early installing across a this in strong brand to demand, are with in purchasing a in experience we're leading share items from to of awareness our product and these amount fair these we our and delivered competitors in necessary good buy even customers

pretty in be shape. good should we So

we're numbers that consummate position slower that, And We've a participating much in believe deals. game. as new to costs. an as there's that participating as uptick to greatly the tremendous of -- we're disguised are board. efficiencies it's On we helping as we pipeline, many Centers can good still innovative in win across mirrored who take reduce that cost have in to for a We're varies, more clients it we're This a the we say side, share. Prospective other -- of believe as requirements has many, that serve, BPO the I consistent a through we're price technologies the absolutely varies meet, Contact for also theme very business possible. is with decision-making great as as is customers. we across got prevailing and to would also, agnostic in different But of capture them enhanced -- capable containment we market employ, we but market say, far checking additional But backlog, I partners and us many RFPs. share. With would looking opportunity we business which seeing can the our types exists

Kevin Steinke

there. XXXX, And But we margin of on what rebound know the as the can helpful annualized to gross on in I Products to about fourth mix impact and any XXXX? year other color. That's quarter, of similar think Branded thoughts the you do with was in something full kind as margin Okay. regard an there you it kind called in the Products? to Or Branded trend think gross margin basis out

Michael Koempel

I would it course the year really over Kevin, out. Yes, of see the balancing

mentioned I skewed comes given quarter, of remarks, question upon, prepared the programs, timing in again, Uniform to result a when way the in program. the As be or one the some could any other the it Branded or of in depending the

And so over when look at the you it it's of more course the balanced. year,

again, And Uniform -- the part. Obviously, you that's program just well Branded a as so have and been that's large margins. promotional business products good driving

So really, that of to you 'XX, look at year consistent were to I'd segment be overall in it the year-over-year. the balance if for expect fairly

Kevin Steinke

just Okay. there of -- in planned leverage significant of revenue for you start to think SG&A a XXXX off investments? investments of bit any And you in the terms get do Or growth? then,

Michael Koempel

anticipated. no investments There's significant

those segments we'd we've think and in continue capabilities, as of before, about across selling we grow our begin expect prior line. in as So certainly and each investments alluding talked to we call SG&A move to top you're certainly leveraging I made the investments and calls, we've -- forward to

nothing as expense XXXX. unusual an -- going from So expect would no into I perspective

Kevin Steinke

factors Okay. see to to terms of thinking more lower lastly, out reduction? for to trying wondering interest what's XXXX kind in Or potentially of and embedded about EPS do those when going guidance more debt just the And you balance debt about interest then less paydown in maybe share maybe expense? repurchases and expense? potential just Just

Michael Koempel

Sure.

combination XXXX. I be interest from I'd would debt think And we're would little think increase. combined expect be bit a bringing expense our I to rate of improved say, of -- with, that weighted average down a outstanding I

about well. those Of factored as forward. expense But couple as interest in of we components think a uncertain going we course, that's our

Operator

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

Michael Benstock

operator, to our investors thanks, for their loyalty like I'd their closing, employees for everyone, and vision. our Thank today's customers our their unwavering for you, call. in thank joining our trust for In and dedication,

opportunities and again deliver look through updating us free thanks our SGC. and please Enjoy focused navigating to challenges additional to seizing questions. move evening, that your are we long-term allow any out reach in and will We feel these interest progress value. on as for you with to We XXXX, the forward on

Operator

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

may now You disconnect.

Superior Group of Companies (SGC) 11 Mar 252024 Q4 Earnings call transcript