Superior Group of Companies, Inc. Reports Operating Results for the Fourth Quarter and Year Ended December 31, 2018
February 21 2019 - 7:00AM
Superior Group of Companies, Inc. (NASDAQ: SGC), today announced
its fourth quarter and year-end operating results for 2018.
The Company announced that for the year ended
December 31, 2018, net sales increased 29.8 percent to $346.4
million, compared to 2017 net sales of $266.8 million. Income
before taxes on income was $21.4 million compared to $24.8 million
in 2017. Net income for the fiscal year 2018 increased 13.0% to
$17.0 million, or $1.10 per diluted share, compared to $15.0
million, or $0.99 per diluted share, reported in 2017. Net income
for 2018 was reduced by approximately $2.0 million ($0.13 per
diluted share) of direct expenses associated with the May 2nd
acquisition of CID Resources.
Net sales for the fourth quarter ended December 31,
2018 increased 31.1 percent to $95.0 million, compared to 2017
fourth quarter net sales of $72.4 million. Income before taxes on
income was $5.7 million compared to $6.8 million in the 2017 fourth
quarter. Net income for the fourth quarter ended December 31, 2018
was $4.6 million, or $0.30 per diluted share, compared to $1.9
million, or $0.12 per diluted share, reported for the fourth
quarter 2017. Fourth quarter 2017 net income was reduced by
approximately $4.0 million, or $0.26 per diluted share, associated
with the enactment of the Tax Cuts and Jobs Act.
Michael Benstock, Chief Executive Officer,
commented, “While the fourth quarter performance of our uniform
segment was below our expectations, we’ve made tremendous progress
on the integration of our uniform businesses within our Superior
Group of Companies. We are aggressively developing avenues to
leverage our expanded product assortment and service lines within
the segment to meet and exceed our existing customers’ expectations
and to gain market share. We are also on schedule with the
integration of our ERP systems that, once completed, will allow us
to maximize cost efficiencies throughout our operations. I’m quite
satisfied with our progress in these areas and am confident in the
overall trajectory of our uniform business as we enter 2019.
I’m particularly pleased with the performance of
BAMKO and The Office Gurus. During the fourth quarter,
BAMKO, our Promotional Products segment, posted strong organic net
sales growth of 32 percent, and total net sales within the segment
grew 68 percent to $24 million. The Office Gurus, our Remote
Staffing segment, continues to outperform our expectations with
quarterly net sales growth to outside customers of 22 percent.”
On January 22, 2019, the Company restructured its
Amended and Restated Credit Agreement (Term Loan) entered into on
May 2, 2018 with our incumbent lender. The restructuring
reduced the principal amount of the Term Loan to $65 million, by
using $20 million of proceeds under our revolving credit facility;
extended the maturity from May 2020 to January 2026; and lowered
the variable interest rate to LIBOR plus 85 basis points. Principal
and interest payments are due monthly through its
maturity.
Michael Attinella, Chief Financial Officer of
Superior Group of Companies, commented, “We are quite pleased with
the restructuring of the Term Loan. We were able to lower our
interest rate and other costs of debt while maintaining repayment
flexibility and extending its term. We are confident that the
combined cash flow from operations and liquidity provided from the
revolving credit facility is more than ample to fund our strategic
plan as we move into 2019 and beyond.”
CONFERENCE CALLSuperior Group of
Companies will hold a conference call on Thursday, February 21,
2019 at 2:00 p.m. Eastern Time to discuss the Company’s results.
Interested individuals may join the teleconference by dialing (844)
861-5505 for U.S. dialers and (412) 317-6586 for International
dialers. The Canadian Toll Free number is (866) 605-3852. Please
ask to be joined into the Superior Group of Companies call. The
live webcast and archived replay can also be accessed in the
investor information section of the Company’s website at
www.superiorgroupofcompanies.com.
A telephone replay of the teleconference will be
available one hour after the end of the call through 2:00 p.m.
Eastern Time on February 28, 2019. To access the replay, dial (877)
344-7529 in the United States or (412) 317-0088 from international
locations. Canadian dialers can access the replay at (855)
669-9658. Please reference conference number
10128748 for all replay access.
About Superior Group of Companies, Inc.
(SGC):
Superior Group of Companies™, formerly Superior
Group of Companies, established in 1920, is a combination of
companies that help customers unlock the power of their brands by
creating extraordinary brand experiences for employees and
customers. It provides customized support for each of its divisions
through its shared services model.
Fashion Seal Healthcare®, HPI™ and CID Resources
are signature uniform brands of Superior Group of Companies. Each
is one of America’s leading providers of uniforms and image apparel
in the markets it serves. They specialize in innovative uniform
program design, global manufacturing, and state-of-the-art
distribution. Every day, more than 6 million Americans go to work
wearing a uniform from Superior Group of Companies.
BAMKO®, Tangerine Promotions® and Public Identity®
are signature promotional products and branded merchandise brands
of Superior Group of Companies. They provide unique custom
branding, design, sourcing, and marketing solutions to some of the
world’s most successful brands.
The Office Gurus® is a global provider of custom
call and contact center support. As a true strategic partner, The
Office Gurus implements customized solutions for its customers in
order to accelerate their growth and improve their customers’
service experiences.
SGC’s commitment to service, technology, quality
and value-added benefits, as well as its financial strength and
resources, provides unparalleled support for its customers’ diverse
needs while embracing a “Customer 1st, Every Time!” philosophy and
culture in all of its business segments.
Visit www.superiorgroupofcompanies.com for more
information.
Contact:
Michael
Attinella
Chief Financial Officer & Treasurer (727)
803-7170
-OR-
Hala ElsherbiniHalliburton Investor Relations(972) 458-8000
Comparative figures are as follows:
|
|
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
INCOME |
YEARS ENDED DECEMBER 31, |
(In thousands, except shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2016 |
Net
sales |
$ |
346,350 |
|
$ |
266,814 |
|
$ |
252,596 |
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
224,653 |
|
|
170,462 |
|
|
165,614 |
|
|
Selling and
administrative expenses |
|
96,710 |
|
|
70,592 |
|
|
65,124 |
|
|
Other periodic pension
costs |
|
385 |
|
|
1,224 |
|
|
1,272 |
|
|
Interest expense |
|
3,207 |
|
|
802 |
|
|
688 |
|
|
|
|
324,955 |
|
|
243,080 |
|
|
232,698 |
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of property, plant and equipment |
|
- |
|
|
1,048 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Income before taxes on income |
|
21,395 |
|
|
24,782 |
|
|
19,898 |
Income tax
expense |
|
4,420 |
|
|
9,760 |
|
|
5,260 |
Net
income |
$ |
16,975 |
|
$ |
15,022 |
|
$ |
14,638 |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding during the period |
|
|
|
|
|
|
|
|
|
|
(Basic) |
|
14,937,786 |
|
|
14,510,156 |
|
|
14,082,243 |
|
|
(Diluted) |
|
15,472,133 |
|
|
15,118,768 |
|
|
14,897,489 |
Per Share
Data: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
$ |
1.14 |
|
$ |
1.04 |
|
$ |
1.04 |
Diluted |
|
|
|
|
|
|
|
|
|
|
Net
earnings |
$ |
1.10 |
|
$ |
0.99 |
|
$ |
0.98 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per common share |
$ |
0.390 |
|
$ |
0.365 |
|
$ |
0.340 |
|
|
|
|
|
|
|
|
|
|
|
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
YEARS ENDED DECEMBER 31, |
(In thousands, except share and par value data) |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
CURRENT
ASSETS: |
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
5,362 |
|
$ |
8,130 |
|
Accounts
receivable, less allowance for doubtful accounts |
|
|
|
|
|
|
of $2,042 and $1,382, respectively |
|
64,017 |
|
|
50,569 |
|
Accounts
receivable - other |
|
1,744 |
|
|
1,848 |
|
Inventories |
|
67,301 |
|
|
64,979 |
|
Contract asset |
|
49,236 |
|
|
- |
|
Prepaid
expenses and other current assets |
|
9,552 |
|
|
11,011 |
|
TOTAL
CURRENT ASSETS |
|
197,212 |
|
|
136,537 |
|
|
|
|
|
|
|
|
PROPERTY,
PLANT AND EQUIPMENT, NET |
|
28,769 |
|
|
26,844 |
OTHER
INTANGIBLE ASSETS, NET |
|
66,312 |
|
|
29,061 |
GOODWILL |
|
33,961 |
|
|
16,032 |
DEFERRED
INCOME TAXES |
|
- |
|
|
2,900 |
OTHER
ASSETS |
|
8,832 |
|
|
7,564 |
|
|
|
$ |
335,086 |
|
$ |
218,938 |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
Accounts
payable |
$ |
24,685 |
|
$ |
19,752 |
|
Other
current liabilities |
|
14,767 |
|
|
12,409 |
|
Current
portion of long-term debt |
|
6,000 |
|
|
6,000 |
|
Current
portion of acquisition-related contingent liabilities |
|
941 |
|
|
3,061 |
|
TOTAL
CURRENT LIABILITIES |
|
46,393 |
|
|
41,222 |
|
|
|
|
|
|
|
|
LONG-TERM
DEBT |
|
111,522 |
|
|
32,933 |
LONG-TERM
PENSION LIABILITY |
|
8,705 |
|
|
8,319 |
LONG-TERM
ACQUISITION-RELATED CONTINGENT LIABILITIES |
|
5,422 |
|
|
7,283 |
DEFERRED
INCOME TAXES |
|
8,475 |
|
|
- |
OTHER
LONG-TERM LIABILITIES |
|
3,648 |
|
|
4,213 |
COMMITMENTS
AND CONTINGENCIES (NOTE 11) |
|
|
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
Preferred
stock, $.001 par value - authorized 300,000 shares (none
issued) |
|
- |
|
|
- |
|
Common
stock, $.001 par value - authorized 50,000,000 shares, issued
and |
|
|
|
|
|
|
|
outstanding -
15,202,387 and 15,081,947, respectively. |
|
15 |
|
|
15 |
|
Additional
paid-in capital |
|
55,859 |
|
|
49,103 |
|
Retained
earnings |
|
103,032 |
|
|
83,129 |
|
Accumulated
other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
Pensions |
|
(7,673) |
|
|
(7,282) |
|
|
Cash flow hedges |
|
113 |
|
|
(90) |
|
|
Foreign currency
translation adjustment |
|
(425) |
|
|
93 |
|
TOTAL SHAREHOLDERS' EQUITY |
|
150,921 |
|
|
124,968 |
|
|
|
$ |
335,086 |
|
$ |
218,938 |
|
|
|
|
|
|
|
|
SUPERIOR GROUP OF
COMPANIES, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
YEARS ENDED DECEMBER 31, |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
2016 |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net income |
$ |
16,975 |
|
$ |
15,022 |
|
$ |
14,638 |
|
Adjustments to reconcile net income |
|
|
|
|
|
|
|
|
|
to net cash provided from operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
7,906 |
|
|
5,653 |
|
|
4,935 |
|
|
Provision for bad debts - accounts receivable |
|
867 |
|
|
1,002 |
|
|
512 |
|
|
Share-based compensation expense |
|
2,264 |
|
|
1,664 |
|
|
1,638 |
|
|
Deferred income tax (benefit) provision |
|
(665) |
|
|
5,114 |
|
|
(1,940) |
|
|
Gain on foreign currency transactions |
|
- |
|
|
- |
|
|
(264) |
|
|
Gain on disposals of property, plant and equipment |
|
- |
|
|
(1,048) |
|
|
- |
|
|
Change in fair value of acquisition-related contingent
liabilities |
(1,116) |
|
|
(89) |
|
|
(31) |
|
|
Changes in assets and liabilities, net of acquisition of
businesses: |
|
|
|
|
|
|
|
|
|
|
Accounts
receivable - trade |
|
(4,886) |
|
|
(4,731) |
|
|
(7,244) |
|
|
|
Accounts
receivable - other |
|
105 |
|
|
1,237 |
|
|
177 |
|
|
|
Contract
asset |
|
(3,382) |
|
|
- |
|
|
- |
|
|
|
Inventories |
|
3,501 |
|
|
4,250 |
|
|
(5,427) |
|
|
|
Prepaid
expenses and other current assets |
|
1,550 |
|
|
(4,151) |
|
|
2,203 |
|
|
|
Other
assets |
|
(1,257) |
|
|
(4,504) |
|
|
(1,029) |
|
|
|
Accounts payable and other current liabilties |
(1,344) |
|
|
3,362 |
|
|
2,030 |
|
|
|
Long-term pension liability |
|
(128) |
|
|
(2,577) |
|
|
829 |
|
|
|
Other
long-term liabilities |
|
(526) |
|
|
2,523 |
|
|
962 |
|
Net cash provided from operating activities |
|
19,864 |
|
|
22,727 |
|
|
11,989 |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
(4,869) |
|
|
(4,248) |
|
|
(7,385) |
|
|
Proceeds from disposals of property, plant and equipment |
- |
|
|
2,858 |
|
|
- |
|
|
Acquisition of businesses, net of acquired cash |
|
(85,597) |
|
|
(7,988) |
|
|
(15,161) |
|
Net cash used in investing activities |
|
(90,466) |
|
|
(9,378) |
|
|
(22,546) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
206,025 |
|
|
74,387 |
|
|
125,067 |
|
|
Repayment of long-term debt |
|
(127,439) |
|
|
(77,573) |
|
|
(106,827) |
|
|
Payment of cash dividends |
|
(5,836) |
|
|
(5,269) |
|
|
(4,707) |
|
|
Payment of acquisition-related contingent liabilities |
|
(2,861) |
|
|
(1,800) |
|
|
(1,800) |
|
|
Proceeds received on exercise of stock options |
|
727 |
|
|
1,872 |
|
|
1,504 |
|
|
Tax benefit
from vesting of acquisition |
|
|
|
|
|
|
|
|
|
|
related
restricted stock |
|
445 |
|
|
650 |
|
|
990 |
|
|
Tax withholdings on exercise of stock rights |
|
(17) |
|
|
(1,186) |
|
|
(405) |
|
|
Common stock reacquired and retired |
|
(2,906) |
|
|
- |
|
|
(714) |
|
Net cash provided from (used in) financing activities |
|
68,138 |
|
|
(8,919) |
|
|
13,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rates on cash |
|
(304) |
|
|
51 |
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
(2,768) |
|
|
4,481 |
|
|
2,613 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents balance, beginning of year |
|
8,130 |
|
|
3,649 |
|
|
1,036 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents balance, end of year |
$ |
5,362 |
|
$ |
8,130 |
|
$ |
3,649 |
|
|
|
|
|
|
|
|
|
|
|
|
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