Market Overview

Superior Group of Companies, Inc. Reports Second Quarter Operating Results

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  • Net Sales Increase 25.6 Percent
  • 23rd Consecutive Quarter with Sales Increase              

SEMINOLE, Fla., July 26, 2018 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ:SGC), manufacturer of uniforms, career apparel and accessories, today announced that for the second quarter ended June 30, 2018, net sales increased 25.6 percent to $82.4 million, compared with 2017 second quarter net sales of $65.6 million.  Net income for the 2018 second quarter was $3.8 million, or $0.25 per diluted share, compared with $4.3 million, or $0.29 per diluted share, reported for the quarter ended June 30, 2017.   Note that earnings in the second quarter of 2018 were reduced by a pre-tax charge of approximately $1.6 million, or approximately $.08 per diluted share, for expenses associated with the acquisition of CID Resources, Inc.

Additionally, the comparison of net sales and earnings results in the current quarter is significantly impacted by the adoption of ASC 606 relative to the timing of revenue recognition.  The 2017 results are calculated under the previous revenue recognition guidance, while 2018 is under the new standard.  This resulted in a reduction in net sales for the second quarter of 2018 of approximately $2.9 million and a corresponding reduction in net income and earnings per diluted share of $0.6 million and $0.04, respectively.  ASC 606 does not change the economic substance or timing of cash flows of our transactions with customers.  After the initial year of adoption, ASC 606 should not have a major impact in our comparative results in the future.

Michael Benstock, Chief Executive Officer, commented, "Over the last year, we completed three acquisitions that have us positioned for significant improvement in our future growth prospects for both net sales and earnings.  We are highly focused on successfully integrating these acquisitions to achieve the maximum long-term benefits for the Company and its shareholders.  While our current operating results in our Uniform segment and our Promotional segment were lower than anticipated, we remain confident in our long-term outlook and believe our current investments in these segments will provide significant returns for the Company in the future.

"The Office Gurus, our Remote Staffing segment, had another tremendous quarter with net sales to outside customers increasing by $2.3 million, or 50.6 percent, as they continue to land new customers and to grow with existing customers.  We are also excited to announce that we have identified Jamaica as the next country for our continued expansion in this segment." 

CONFERENCE CALL

Superior Group of Companies will hold a conference call on Thursday, July 26, 2018 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 August 2, 2018. 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 10121858 for all replay access.

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 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:        
Andrew D. Demott, Jr.,
COO, CFO & Treasurer
(727) 803-7135
  OR   Hala Elsherbini
Halliburton Investor Relations
(972) 458-8000

Comparative figures are as follows:

 
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
THREE MONTHS ENDED JUNE 30,
(Unaudited)
(In thousands, except shares and per share data)
 
    2018   2017
         
Net sales $ 82,392 $ 65,604
         
Costs and expenses:        
  Cost of goods sold   53,114   42,230
  Selling and administrative expenses   23,327   16,994
  Other periodic pension costs   96   484
  Interest expense   758   195
    77,295   59,903
         
Gain on sale of property, plant and equipment   -   -
         
         
Income before taxes on income   5,097   5,701
Income tax expense   1,280   1,360
         
Net income $ 3,817 $ 4,341
         
Weighted average number of shares outstanding during the period      
  (Basic)     14,956,221   14,501,399
  (Diluted)     15,559,404   15,040,431
Per Share Data:        
Basic        
  Net income $   0.26 $ 0.30
Diluted        
  Net income $   0.25 $ 0.29
         
Cash dividends per common share $   0.0950 $ 0.0875
         


 
SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
SIX MONTHS ENDED JUNE 30,
(Unaudited)
(In thousands, except shares and per share data)
 
    2018   2017
         
Net sales $ 155,479 $ 126,591
         
Costs and expenses:        
  Cost of goods sold   101,326   81,003
  Selling and administrative expenses   44,509   34,423
  Other periodic pension costs   192   698
  Interest expense   1,035   379
    147,062   116,503
         
Gain on sale of property, plant and equipment   -   1,018
         
         
Income before taxes on income   8,417   11,106
Income tax expense   2,150   2,930
         
Net income $ 6,267 $ 8,176
         
Weighted average number of shares outstanding during the period      
  (Basic)     14,888,940   14,426,060
  (Diluted)     15,508,517   14,985,063
Per Share Data:        
Basic        
  Net income $   0.42 $ 0.57
Diluted        
  Net income $   0.40 $ 0.55
         
Cash dividends per common share $   0.1900 $ 0.1750
         


SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per value data)
 
ASSETS
         
    June 30,    
    2018   December 31,
    (Unaudited)   2017
CURRENT ASSETS:        
Cash and cash equivalents $ 4,164   $ 8,130  
Accounts receivable, less allowance for doubtful accounts        
of  $1,722 and $1,382, respectively   63,269     50,569  
Accounts receivable - other   2,522     1,848  
Inventories   67,852     64,979  
Contract assets   46,826     -  
Prepaid expenses and other current assets     10,830     11,011  
TOTAL CURRENT ASSETS   195,463     136,537  
         
PROPERTY, PLANT AND EQUIPMENT, NET   28,564     26,844  
OTHER INTANGIBLE ASSETS, NET     66,338     29,061  
GOODWILL     35,327     16,032  
DEFERRED INCOME TAXES    -      2,900  
OTHER ASSETS   9,470     7,564  
  $ 335,162   $ 218,938  
         
LIABILITIES AND SHAREHOLDERS' EQUITY
         
CURRENT LIABILITIES:        
Accounts payable $ 22,337   $ 19,752  
Other current liabilities   11,327     12,409  
Current portion of long-term debt   6,000     6,000  
Current portion of acquisition-related contingent liabilities   1,410     3,061  
TOTAL CURRENT LIABILITIES   41,074     41,222  
         
LONG-TERM DEBT   122,801     32,933  
LONG-TERM PENSION LIABILITY   7,947     8,319  
LONG-TERM ACQUISITION-RELATED CONTINGENT LIABILITIES   5,056     7,283  
DEFERRED INCOME TAXES   8,900     -  
OTHER LONG-TERM LIABILITIES   3,800     4,213  
COMMITMENTS AND CONTINGENCIES (NOTE 5)        
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 - 15,311,541 and 15,081,947, respectively.   15     15  
Additional paid-in capital   54,998     49,103  
Retained earnings   97,664     83,129  
Accumulated other comprehensive income (loss), net of tax:        
Pensions     (6,851 )   (7,282 )
Cash flow hedges     122     (90 )
Foreign currency translation adjustment     (364 )   93  
TOTAL SHAREHOLDERS' EQUITY   145,584     124,968  
  $ 335,162   $ 218,938  
         


SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
(Unaudited)
(In thousands)
 
 
    2018   2017
         
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income $ 6,267   $ 8,176  
Adjustments to reconcile net income        
to net cash (used in) provided by operating activities:        
  Depreciation and amortization   3,646     2,715  
  Provision for bad debts - accounts receivable   323     575  
  Share-based compensation expense   1,490     1,108  
  Deferred income tax provision (benefit)   302     (509 )
  Gain on sale of property, plant and equipment   -     (1,018 )
  Change in fair value of acquisition-related contingent liabilities   (840 )   81  
         
  Changes in assets and liabilities, net of acquistion of business        
    Accounts receivable - trade   (3,492 )   552  
    Accounts receivable - other   (674 )   674  
    Contract assets   (972 )   -  
    Inventories   2,953     1,632  
    Prepaid expenses and other current assets   242     (1,353 )
    Other assets   (1,827 )   (1,784 )
    Accounts payable and other current liabilities   (7,368 )   (2,223 )
    Long-term pension liability   195     (894 )
    Other long-term liabilities   (497 )   829  
  Net cash (used in) provided by operating activities   (252 )   8,561  
         
CASH FLOWS FROM INVESTING ACTIVITIES        
  Additions to property, plant and equipment   (2,414 )   (2,004 )
  Acquistion of business, net of acquired cash   (85,597 )   -  
  Proceeds from disposals of property, plant and equipment   -     2,810  
  Net cash (used in) provided by investing activities   (88,011 )   806  
         
CASH FLOWS FROM FINANCING ACTIVITIES        
  Proceeds from long-term debt   146,157     72,422  
  Repayment of long-term debt   (56,289 )   (74,088 )
  Payment of cash dividends   (2,827 )   (2,490 )
  Payment of acquisition-related contingent liabilities   (3,033 )   (1,800 )
  Proceeds received on exercise of stock options   405     798  
  Tax benefit from vesting of acquisition-related restricted stock   105     70  
  Tax withholding on exercise of stock rights   (17 )   (421 )
         
Net cash provided by (used in) financing activities   84,501     (5,509 )
         
Effect of currency exchange rates on cash   (204 )   76  
         
Net (decrease) increase in cash and cash equivalents   (3,966 )   3,934  
         
Cash and cash equivalents balance, beginning of year   8,130     3,649  
         
Cash and cash equivalents balance, end of period $ 4,164   $ 7,583  
         

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