Superior Group of Companies, Inc. (NASDAQ: SGC), today announced
its second quarter operating results for 2021.
The Company announced that for the
second quarter ended June 30, 2021, net sales
decreased 17.9% to $130.8 million, compared to
second quarter 2020 net sales of $159.4 million. Pretax
Income was $5.5 million compared to $18.9 million in the
second quarter of 2020. Net income was $4.6 million or
$0.28 per diluted share compared to $15.2 million,
or $1.00 per diluted share for the second quarter of
2020. In the second quarter of 2021, the Company
terminated its two noncontributory qualified defined benefit
pension plans, which were fully funded. Consequently, the Company
recognized a pre-tax settlement charge of $6.9 million during
the second quarter of 2021. Net of related tax benefits, this
charge reduced net income per diluted share by $0.39. The pension
plan terminations did not require a cash outlay by the Company.
Absent the non-cash charge for the pension plan terminations, we
would have reported $0.67 net income per diluted share for the
quarter.
Michael Benstock, Chief Executive Officer,
commented, “We are extremely excited by the exceptional momentum of
our core businesses which face the most attractive outlook in our
Company’s history. We are now at a stage where we believe that
sales of any significant amount of crisis personal protective
equipment (PPE) are behind us, and we are laser focused on our core
products and services. Excluding the impact of PPE sales, we
saw tremendous growth in our promotional products segment and our
remote staffing solutions segment. This represented BAMKO’s
third consecutive quarter of record quarterly sales of core
promotional products. BAMKO finished the quarter with the largest
backlog of sales in the history of the segment, with the backlog
comprised of 99.6% of core promotional products.
Additionally, The Office Gurus added significantly more new seats
in the second quarter than we had originally forecasted for the
full year. Uniform segment net sales, excluding PPE sales,
were down slightly due to the significant pandemic demand for our
core healthcare products in the second quarter of 2020. We
were able to replace the vast majority of these sales with
increased demand from our non-essential markets and sales from
additional channels in our healthcare business. We are well
positioned with strong tailwinds in all of our core businesses and
expect to continue to report strong sales and earnings for the
balance of 2021. We now expect net sales for 2021 to approach
$525 million. For perspective, the full year 2020 included
total PPE sales of $131.1 million and full year 2021 sales of PPE
are expected to be less than $45 million.”
CONFERENCE CALL
Superior Group of Companies will hold a
conference call on Wednesday, July 28, 2021 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
https://ir.superiorgroupofcompanies.com/Presentations.
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 August 11, 2021. 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
10158424 for all replay access.
Disclosure Regarding Forward Looking
Statements
Certain matters discussed in this Form 10-Q are
“forward-looking statements” intended to qualify for the safe
harbors from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
generally be identified by use of the words “may,” “will,”
“should,” “could,” “expect,” anticipate,” “estimate,” “believe,”
“intend,” “project,” “potential,” or “plan” or the negative of
these words or other variations on these words or comparable
terminology. Forward-looking statements in this Quarterly Report on
Form 10-Q may include, without limitation: (1) the projected impact
of the COVID-19 pandemic on our, our customers’, and our suppliers’
businesses, (2) projections of revenue, income, and other items
relating to our financial position and results of operations, (3)
statements of our plans, objectives, strategies, goals and
intentions, (4) statements regarding the capabilities, capacities,
market position and expected development of our business
operations, and (5) statements of expected industry and general
economic trends.
Such forward-looking statements are subject to
certain risks and uncertainties that may materially adversely
affect the anticipated results. Such risks and uncertainties
include, but are not limited to, the following: the impact of
competition; the effect of uncertainties related to the COVID-19
pandemic, including existing and possible future variants, on the
United States of America (“U.S.” or “United States”) and global
markets, our business, operations, customers, suppliers and
employees, including without limitation the length and scope of
restrictions imposed by various governments and organizations and
the success of efforts to deliver effective vaccines on a timely
basis to a number of people sufficient to prevent or substantially
lower the severity of incidents of infection or variants, among
other factors; our ability to navigate successfully the challenges
posed by current global supply disruptions; general economic
conditions, including employment levels, in the areas of the United
States in which the Company’s customers are located; changes in the
healthcare, retail, hotels, food service, transportation and other
industries where uniforms and service apparel are worn; our ability
to identify suitable acquisition targets, successfully integrate
any acquired businesses, successfully manage our expanding
operations, or discover liabilities associated with such businesses
during the diligence process; the price and availability of cotton
and other manufacturing materials; attracting and retaining senior
management and key personnel and other factors described in the
Company’s filings with the Securities and Exchange Commission,
including those described in the “Risk Factors” section herein and
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2020. Shareholders, potential investors and other
readers are urged to consider these factors carefully in evaluating
the forward-looking statements made herein and are cautioned not to
place undue reliance on such forward-looking statements. The
forward-looking statements made herein are only made as of the date
of this Form 10-Q and we disclaim any obligation to publicly update
such forward-looking statements to reflect subsequent events or
circumstances, except as may be required by law.
About Superior Group of Companies, Inc.
(SGC):
Superior Group of Companies™ formerly Superior
Uniform Group, established in 1920, is a combination of companies
that help our customers unlock the power of their brands by
creating extraordinary brand engagement experiences for their
employees and customers. We provide customized support for each of
our divisions through our shared services model.
Fashion Seal Healthcare®, HPI® and WonderWink®
are our core uniform brands. Each is one of America’s leading
providers of uniforms and image apparel in the markets we serve. We
specialize in innovative uniform program design, global
manufacturing, and state-of-the-art distribution. Every workday,
more than 7 million Americans go to work wearing a uniform from
Superior Group of Companies.
BAMKO®, Tangerine Promotions®, Public Identity®
and Gifts By Design™ are our signature promotional product
companies. We 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 our customers in
order to accelerate their growth and improve our customers’ service
experiences.
SGC’s commitment to service, technology, quality
and value-added benefits, as well as our financial strength and
resources, provides unparalleled support for our customers’ diverse
needs while embracing a “Customer 1st, Every Time!” philosophy and
culture in all of our business segments.
Visit www.superiorgroupofcompanies.com for more information.
Contact: |
|
|
Andrew D. Demott, Jr. |
|
Hala Elsherbini |
COO, CFO & Treasurer |
-OR- |
Three Part Advisors |
727-803-7135 |
|
Senior Managing Director |
|
|
214-442-0016 |
Comparative figures are as follows:
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands, except share and per share data) |
|
|
Three Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
Net sales |
|
$ |
130,787 |
|
|
$ |
159,359 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
83,629 |
|
|
|
103,421 |
|
Selling and administrative expenses |
|
|
33,906 |
|
|
|
36,298 |
|
Other periodic pension costs |
|
|
440 |
|
|
|
333 |
|
Pension plan termination charge |
|
|
6,945 |
|
|
|
- |
|
Interest expense |
|
|
330 |
|
|
|
433 |
|
|
|
|
125,250 |
|
|
|
140,485 |
|
Income before taxes on
income |
|
|
5,537 |
|
|
|
18,874 |
|
Income tax expense |
|
|
960 |
|
|
|
3,700 |
|
Net income |
|
$ |
4,577 |
|
|
$ |
15,174 |
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.30 |
|
|
$ |
1.01 |
|
Diluted |
|
$ |
0.28 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding during the period: |
|
|
|
|
|
|
|
|
Basic |
|
|
15,433,412 |
|
|
|
15,016,062 |
|
Diluted |
|
|
16,087,736 |
|
|
|
15,171,086 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per common
share |
|
$ |
0.12 |
|
|
$ |
- |
|
SUPERIOR GROUP OF COMPANIES, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In thousands, except share and per
share data)
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
Net sales |
|
$ |
271,634 |
|
|
$ |
253,604 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
175,433 |
|
|
|
164,215 |
|
Selling and administrative expenses |
|
|
69,017 |
|
|
|
63,787 |
|
Other periodic pension costs |
|
|
869 |
|
|
|
618 |
|
Pension plan termination charge |
|
|
6,945 |
|
|
|
- |
|
Interest expense |
|
|
605 |
|
|
|
1,493 |
|
|
|
|
252,869 |
|
|
|
230,113 |
|
Income before taxes on
income |
|
|
18,765 |
|
|
|
23,491 |
|
Income tax expense |
|
|
3,710 |
|
|
|
4,950 |
|
Net income |
|
$ |
15,055 |
|
|
$ |
18,541 |
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.98 |
|
|
$ |
1.23 |
|
Diluted |
|
$ |
0.94 |
|
|
$ |
1.22 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding during the period |
|
|
|
|
|
|
|
|
Basic |
|
|
15,327,374 |
|
|
|
15,020,457 |
|
Diluted |
|
|
16,039,605 |
|
|
|
15,185,992 |
|
|
|
|
|
|
|
|
|
|
Cash dividends per common
share |
|
$ |
0.22 |
|
|
$ |
0.10 |
|
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(In thousands, except share and par value data) |
|
|
June 30, |
|
|
December 31, |
|
|
|
2021 |
|
|
2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,530 |
|
|
$ |
5,172 |
|
Accounts receivable, less allowance for doubtful accounts of $5,466
and $7,667, respectively |
|
|
101,591 |
|
|
|
101,902 |
|
Accounts receivable - other |
|
|
2,999 |
|
|
|
1,356 |
|
Inventories |
|
|
98,572 |
|
|
|
89,766 |
|
Contract assets |
|
|
41,151 |
|
|
|
39,231 |
|
Prepaid expenses and other current assets |
|
|
13,805 |
|
|
|
11,030 |
|
Total current assets |
|
|
265,648 |
|
|
|
248,457 |
|
Property, plant and equipment,
net |
|
|
45,070 |
|
|
|
36,644 |
|
Operating lease right-of-use
assets |
|
|
5,872 |
|
|
|
3,826 |
|
Intangible assets, net |
|
|
60,476 |
|
|
|
58,746 |
|
Goodwill |
|
|
38,618 |
|
|
|
36,116 |
|
Other assets |
|
|
13,062 |
|
|
|
10,135 |
|
Total assets |
|
$ |
428,746 |
|
|
$ |
393,924 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
38,039 |
|
|
$ |
39,327 |
|
Other current liabilities |
|
|
33,790 |
|
|
|
44,670 |
|
Current portion of long-term debt |
|
|
15,286 |
|
|
|
15,286 |
|
Current portion of acquisition-related contingent liabilities |
|
|
3,362 |
|
|
|
5,589 |
|
Total current liabilities |
|
|
90,477 |
|
|
|
104,872 |
|
Long-term debt |
|
|
98,205 |
|
|
|
72,372 |
|
Long-term pension
liability |
|
|
14,443 |
|
|
|
14,574 |
|
Long-term acquisition-related
contingent liabilities |
|
|
- |
|
|
|
1,892 |
|
Long-term operating lease
liabilities |
|
|
1,952 |
|
|
|
1,599 |
|
Deferred tax liability |
|
|
1,353 |
|
|
|
450 |
|
Other long-term
liabilities |
|
|
8,801 |
|
|
|
6,535 |
|
Commitments and contingencies
(Note 6) |
|
|
|
|
|
|
|
|
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 15,824,530 and 15,391,660 shares,
respectively. |
|
|
16 |
|
|
|
15 |
|
Additional paid-in capital |
|
|
65,578 |
|
|
|
61,844 |
|
Retained earnings |
|
|
153,412 |
|
|
|
141,972 |
|
Accumulated other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
Pensions |
|
|
(4,563 |
) |
|
|
(10,898 |
) |
Cash flow hedges |
|
|
58 |
|
|
|
69 |
|
Foreign currency translation adjustment |
|
|
(986 |
) |
|
|
(1,372 |
) |
Total shareholders’ equity |
|
|
213,515 |
|
|
|
191,630 |
|
Total liabilities and shareholders’ equity |
|
$ |
428,746 |
|
|
$ |
393,924 |
|
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net income |
|
$ |
15,055 |
|
|
$ |
18,541 |
|
Adjustments to reconcile net
income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,373 |
|
|
|
3,959 |
|
Provision for bad debts - accounts receivable |
|
|
1,244 |
|
|
|
4,517 |
|
Share-based compensation expense |
|
|
1,669 |
|
|
|
1,061 |
|
Deferred income tax benefit |
|
|
(1,126 |
) |
|
|
(2,417 |
) |
Change in fair value of acquisition-related contingent
liabilities |
|
|
1,741 |
|
|
|
1,165 |
|
Pension plan termination charge |
|
|
6,945 |
|
|
|
- |
|
Changes in assets and liabilities, net of acquisition of
business: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(896 |
) |
|
|
(12,261 |
) |
Accounts receivable - other |
|
|
(1,392 |
) |
|
|
264 |
|
Contract assets |
|
|
(1,868 |
) |
|
|
3,404 |
|
Inventories |
|
|
(8,738 |
) |
|
|
492 |
|
Prepaid expenses and other current assets |
|
|
(2,565 |
) |
|
|
(1,479 |
) |
Other assets |
|
|
(1,401 |
) |
|
|
390 |
|
Accounts payable and other current liabilities |
|
|
(14,535 |
) |
|
|
21,023 |
|
Payment of acquisition-related contingent liabilities |
|
|
(4,220 |
) |
|
|
- |
|
Long-term pension liability |
|
|
384 |
|
|
|
639 |
|
Other long-term liabilities |
|
|
2,320 |
|
|
|
464 |
|
Net cash provided by (used in) operating activities |
|
|
(3,010 |
) |
|
|
39,762 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
Additions to property, plant
and equipment |
|
|
(11,326 |
) |
|
|
(4,893 |
) |
Acquisition of business |
|
|
(6,026 |
) |
|
|
- |
|
Net cash used in investing activities |
|
|
(17,352 |
) |
|
|
(4,893 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from borrowings of
debt |
|
|
127,574 |
|
|
|
77,525 |
|
Repayment of debt |
|
|
(101,801 |
) |
|
|
(111,838 |
) |
Payment of cash dividends |
|
|
(3,437 |
) |
|
|
(1,521 |
) |
Payment of acquisition-related
contingent liability |
|
|
(1,641 |
) |
|
|
(1,966 |
) |
Proceeds received on exercise
of stock options |
|
|
2,122 |
|
|
|
33 |
|
Tax withholdings on exercise
of performance based stock |
|
|
(405 |
) |
|
|
- |
|
Tax (provision) benefit from
vesting of acquisition-related restricted stock |
|
|
171 |
|
|
|
(13 |
) |
Common stock reacquired and
retired |
|
|
- |
|
|
|
(500 |
) |
Net cash provided by (used in) financing activities |
|
|
22,583 |
|
|
|
(38,280 |
) |
|
|
|
|
|
|
|
|
|
Effect of currency exchange
rates on cash |
|
|
137 |
|
|
|
(525 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
|
2,358 |
|
|
|
(3,936 |
) |
Cash and cash equivalents
balance, beginning of period |
|
|
5,172 |
|
|
|
9,038 |
|
Cash and cash equivalents
balance, end of period |
|
$ |
7,530 |
|
|
$ |
5,102 |
|
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES |
NON-GAAP FINANCIAL MEASURES |
(Unaudited) |
(In thousands, except share and par value data) |
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net income |
|
$ |
4,577 |
|
|
$ |
15,174 |
|
|
$ |
15,055 |
|
|
$ |
18,541 |
|
Adjustment for items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension plan termination charge |
|
|
6,945 |
|
|
|
- |
|
|
|
6,945 |
|
|
|
- |
|
Tax impact of adjustment |
|
|
(610 |
) |
|
|
- |
|
|
|
(610 |
) |
|
|
- |
|
Adjusted net income(1) |
|
$ |
10,912 |
|
|
$ |
15,174 |
|
|
$ |
21,390 |
|
|
$ |
18,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share |
|
$ |
0.28 |
|
|
$ |
1.00 |
|
|
$ |
0.94 |
|
|
$ |
1.22 |
|
Adjustment for items,
after-tax, per diluted share |
|
|
0.39 |
|
|
|
- |
|
|
|
0.39 |
|
|
|
- |
|
Diluted adjusted net income
per share(1) |
|
$ |
0.67 |
|
|
$ |
1.00 |
|
|
$ |
1.33 |
|
|
$ |
1.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
16,087,736 |
|
|
|
15,171,086 |
|
|
|
16,039,605 |
|
|
|
15,185,992 |
|
(1) Adjusted net income and
diluted adjusted net income per share, which are non-GAAP measures,
are defined as net income and net income per share, excluding the
impact of pension plan termination charges (net of tax). Management
believes adjusted net income and diluted adjusted net income per
share provides useful information to investors because it allows
management, investors and others to evaluate and compare our
operating results from period to period by removing the impact of
pension plan termination charges not appropriately reflective of
our core business. |
Superior Group of Compan... (NASDAQ:SGC)
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