Superior Group of Companies Reports Fourth Quarter Results

Superior Group of Companies

– Total net sales of $147.2 million versus $148.6 million in prior year fourth quarter –

– Net income of $3.6 million versus net income of $2.2 million in prior year fourth quarter –

– EBITDA of $9.9 million versus adjusted $3.5 million in prior year fourth quarter –

– Provides full-year outlook –

ST. PETERSBURG, Fla., March 13, 2024 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ: SGC) (the “Company”), today announced its fourth quarter 2023 results.

“We capped off 2023 with our best quarter of the year, delivering sequential improvement, stronger profitability and continued positive cash flow along with a substantially improved balance sheet,” said Michael Benstock, Chief Executive Officer. “Underlying fundamentals are moving in the right direction, consistent with what we saw through much of 2023. With our strong retention and new client wins, we are optimistic that we will continue to drive improved performance and consistently solid results. All three of our attractive end markets are growing and highly fragmented, and we believe our stronger financial position will enable us to take additional market share and enhance shareholder value in 2024 and beyond.”

Fourth Quarter Results

For the fourth quarter ended December 31, 2023, net sales decreased 0.9% to $147.2 million compared to fourth quarter 2022 net sales of $148.6 million. Pretax income was $4.2 million compared to $1.2 million in the fourth quarter of 2022. Net income was $3.6 million or $0.22 per diluted share compared to $2.2 million or $0.14 per diluted share for the fourth quarter of 2022.

In the prior year fourth quarter, the Company realized a pre-tax, non-operating gain of $3.4 million. On an adjusted basis, which excludes the prior year’s pre-tax, non-operating gain, this quarter’s net income of $3.6 million or $0.22 per diluted share compares to a net loss of $0.9 million or $0.06 per diluted share for the prior year. At the conclusion of this press release is a reconciliation of reported to adjusted results, including a description of significant items.

2024 Full-Year Outlook

The Company is forecasting full year 2024 sales to be $558 million to $568 million versus 2023 sales of $543 million, and forecasting earnings per share to be $0.61 to $0.68, compared to $0.54 diluted adjusted earnings per share in 2023.

Webcast and Conference Call

The Company will host a webcast and conference call at 5:00 pm Eastern Time today. The live webcast and archived replay can be accessed in the investor relations section of the Company's website at https://ir.superiorgroupofcompanies.com/Presentations. Interested individuals may also join the teleconference by dialing 1-844-861-5505 for U.S. dialers and 1-412-317-6586 for International dialers. The Canadian Toll-Free number is 1-866-605-3852. Please ask to be joined to the Superior Group of Companies call. A telephone replay of the teleconference will be available through March 27, 2024. To access the replay, dial 1-877-344-7529 in the United States or 1-412-317-0088 from international locations. Canadian dialers can access the replay at 855-669-9658. Please reference conference number 2106897 for replay access.

Disclosure Regarding Forward Looking Statements

Certain matters discussed in this press release 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 press release may include, without limitation: (1) projections of revenue, income, and other items relating to our financial position and results of operations, including short-term and long-term plans for cash, (2) statements of our plans, objectives, strategies, goals and intentions, (3) statements regarding the capabilities, capacities, market position and expected development of our business operations, and (4) 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; uncertainties related to supply disruptions, inflationary environment (including with respect to the cost of finished goods and raw materials and shipping costs), employment levels (including labor shortages), and general economic and political conditions in the areas of the world in which the Company operates or from which it sources its supplies or the areas of the United States of America (“U.S.” or “United States”) in which the Company’s customers are located; changes in the healthcare, retail chain, food service, transportation and other industries where uniforms and service apparel are worn; our ability to identify suitable acquisition targets, discover liabilities associated with such businesses during the diligence process, successfully integrate any acquired businesses, or successfully manage our expanding operations; the price and availability of raw materials; attracting and retaining senior management and key personnel; the effect of the Company’s material weakness in internal control over financial reporting; the Company’s ability to successfully remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting; and other factors described in the Company’s filings with the Securities and Exchange Commission, including those described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. 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 press release 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):

Established in 1920, Superior Group of Companies is comprised of three attractive business segments each serving large, fragmented and growing addressable markets. Across Healthcare Apparel, Branded Products and Contact Centers, each segment enables businesses to create extraordinary brand engagement experiences for their customers and employees. SGC’s commitment to service, quality, advanced technology, and omnichannel commerce provides unparalleled competitive advantages. We are committed to enhancing shareholder value by continuing to pursue a combination of organic growth and strategic acquisitions. For more information, visit www.superiorgroupofcompanies.com.

Investor Relations Contact:

Investors@Superiorgroupofcompanies.com

Comparative figures are as follows:

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except shares and per share data)
		Three Months Ended December 31,								Years Ended December 31,
		2023				2022				2023				2022
Net sales		$	147,241			$	148,613			$	543,302			$	578,831
Costs and expenses:
Cost of goods sold			91,596				103,805				339,755				385,472
Selling and administrative expenses			49,198				44,322				183,205				176,320
Goodwill impairment charge			-				-				-				45,918
Intangible assets impairment charge			-				-				-				5,581
Other periodic pension costs			213				532				855				2,116
Interest expense			2,060				2,218				9,718				4,894
			143,067				150,877				533,533				620,301
Gain on sale of property, plant and equipment			-				3,435				-				3,435
Income (loss) before income tax expense			4,174				1,171				9,769				(38,035	)
Income tax expense (benefit)			617				(1,023	)			997				(6,065	)
Net income (loss)		$	3,557			$	2,194			$	8,772			$	(31,970	)
Net income (loss) per share:
Basic		$	0.22			$	0.14			$	0.55			$	(2.03	)
Diluted		$	0.22			$	0.14			$	0.54			$	(2.03	)
Weighted average shares outstanding during the period:
Basic			16,010,006				15,841,296				15,968,199				15,764,859
Diluted			16,238,736				16,075,494				16,159,308				15,764,859
Cash dividends per common share		$	0.14			$	0.14			$	0.56			$	0.54

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and par value data)
		December 31,
		2023				2022
ASSETS
Current assets:
Cash and cash equivalents		$	19,896			$	17,722
Accounts receivable, less allowance for doubtful accounts of $4,237 and $7,622, respectively			103,494				104,813
Accounts receivable - other			307				3,326
Inventories			98,067				124,976
Contract assets			48,715				52,980
Prepaid expenses and other current assets			8,881				14,166
Total current assets			279,360				317,983
Property, plant and equipment, net			46,890				51,392
Operating lease right-of-use assets			17,909				9,113
Deferred tax asset			12,356				10,718
Intangible assets, net			51,160				55,753
Other assets			14,775				11,982
Total assets		$	422,450			$	456,941
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	50,520			$	42,060
Other current liabilities			43,978				38,646
Current portion of long-term debt			4,688				3,750
Current portion of acquisition-related contingent liabilities			1,403				736
Total current liabilities			100,589				85,192
Long-term debt			88,789				151,567
Long-term pension liability			13,284				12,864
Long-term acquisition-related contingent liabilities			557				2,245
Long-term operating lease liabilities			12,809				3,936
Other long-term liabilities			8,784				8,538
Total liabilities			224,812				264,342
Commitments and contingencies
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 - 16,564,712 and 16,376,683 shares, respectively			16				16
Additional paid-in capital			77,443				72,615
Retained earnings			122,464				122,979
Accumulated other comprehensive income (loss), net of tax:
Pensions			(1,122	)			(1,113	)
Foreign currency translation adjustment			(1,163	)			(1,898	)
Total shareholders’ equity			197,638				192,599
Total liabilities and shareholders’ equity		$	422,450			$	456,941

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
		Years Ended December 31,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	8,772			$	(31,970	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			13,995				13,004
Goodwill impairment charge			-				45,918
Intangible assets impairment charge			-				5,581
Inventory write-downs			2,346				13,569
Provision for bad debts - accounts receivable			539				2,891
Share-based compensation expense			3,787				4,289
Deferred income tax benefit			(1,635	)			(12,352	)
Gain on sale of property, plant and equipment			-				(3,435	)
Change in fair value of acquisition-related contingent liabilities			(189	)			(450	)
Change in fair value of written put options			489				(1,565	)
Changes in assets and liabilities, net of acquisition of businesses:
Accounts receivable			1,051				680
Accounts receivable - other			3,019				1,347
Contract assets			4,310				(15,092	)
Inventories			24,672				(15,898	)
Prepaid expenses and other current assets			5,496				5,225
Other assets			(2,012	)			1,858
Accounts payable and other current liabilities			13,310				(14,614	)
Payment of acquisition-related contingent liabilities			(279	)			(3,346	)
Long-term pension liability			407				2,190
Other long-term liabilities			851				(434	)
Net cash provided by (used in) operating activities			78,929				(2,604	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment			(4,963	)			(11,018	)
Proceeds from disposals of property, plant and equipment			-				4,795
Acquisition of businesses			-				(11,202	)
Other investments			(545	)			-
Net cash used in investing activities			(5,508	)			(17,425	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings of debt			6,000				332,143
Repayment of debt			(67,750	)			(292,773	)
Debt issuance costs			(300	)			(869	)
Payment of cash dividends			(9,188	)			(8,653	)
Payment of acquisition-related contingent liabilities			(553	)			(1,416	)
Proceeds received on exercise of stock options			175				728
Tax withholdings on vesting of restricted shares and performance based shares and on exercise of stock rights			-				(314	)
Net cash provided by (used in) financing activities			(71,616	)			28,846
Effect of currency exchange rates on cash			369				(30	)
Net increase in cash and cash equivalents			2,174				8,787
Cash and cash equivalents balance, beginning of year			17,722				8,935
Cash and cash equivalents balance, end of year		$	19,896			$	17,722

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except shares and per share data)
		Three Months Ended December 31,								Years Ended December 31,
		2023				2022				2023				2022
Net income (loss)		$	3,557			$	2,194			$	8,772			$	(31,970	)
Interest expense			2,060				2,218				9,718				4,894
Income tax expense (benefit)			617				(1,023	)			997				(6,065	)
Depreciation and amortization			3,664				3,500				13,995				13,004
Goodwill impairment charge			-				-				-				45,918
Intangible assets impairment charge			-				-				-				5,581
Gain on sale of property, plant and equipment			-				(3,435	)			-				(3,435	)
Adjusted EBITDA(1)		$	9,898			$	3,454			$	33,482			$	27,927
Net income (loss)		$	3,557			$	2,194			$	8,772			$	(31,970	)
Adjustment for items:
Goodwill impairment charge			-				-				-				45,918
Intangible assets impairment charge			-				-				-				5,581
Gain on sale of property, plant and equipment			-				(3,435	)			-				(3,435	)
Tax impact of adjustments(2)			-				324				-				(6,061	)
Adjusted net income (loss)(3)		$	3,557			$	(917	)		$	8,772			$	10,033
Diluted net income (loss) per share		$	0.22			$	0.14			$	0.54			$	(2.03	)
Adjustment for items, after-tax, per diluted share			-				(0.20	)			-				2.65
Diluted adjusted net income (loss) per share(3)		$	0.22			$	(0.06	)		$	0.54			$	0.62
Weighted average shares outstanding during the period:
Diluted, as reported			16,238,736				16,075,494				16,159,308				15,764,859
Diluted, as adjusted(4)			16,238,736				15,841,296				16,159,308				16,165,240

(1) Adjusted EBITDA, which is a non-GAAP financial measure, is defined as net income (loss) excluding interest expense, income tax expense, depreciation and amortization expense, impairment charges and the other items described in the following sentence. The Company believes Adjusted EBITDA is an important measure of operating performance because it allows management, investors and others to evaluate and compare the Company’s core operating results from period to period by removing (i) the impact of the Company’s capital structure (interest expense from outstanding debt), (ii) tax consequences, (iii) asset base (depreciation and amortization), (iv) the non-cash charges from asset impairments and (v) gains or losses on the sale of property, plant and equipment. The Company uses Adjusted EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used Adjusted EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs. Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate Adjusted EBITDA are significant components in understanding and assessing the Company’s results of operations. The presentation of the Company’s Adjusted EBITDA may change from time to time, including as a result of changed business conditions, new accounting pronouncements or otherwise. If the presentation changes, the Company undertakes to disclose any change between periods and the reasons underlying that change. The Company’s Adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate Adjusted EBITDA in the same manner.

(2) The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, and the tax effect of items that relate to tax specific financial transactions.

(3) Adjusted net income (loss) and diluted adjusted net income (loss) per share, which are non-GAAP measures, are defined as net income (loss) and net income (loss) per share, excluding the impacts of impairment charges and gains or losses on the sale of property, plant and equipment. Management believes adjusted net income (loss) and diluted adjusted net income (loss) 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 impairment charges and gains or losses on the sale of property, plant and equipment that are not reflective of our core business.

(4) Diluted weighted average shares outstanding used to calculate diluted adjusted net loss per share excludes shares of common stock of 234,198 for the three months ended December 31, 2022, as the Company recognized an adjusted net loss and their inclusion would have been antidilutive. Diluted weighted average shares outstanding used to calculate diluted adjusted net income per share includes shares of common stock of 400,381 for the year ended December 31, 2022. These shares were excluded from diluted weighted average shares outstanding used to calculate diluted net income (loss) per share, as the Company recognized a net loss and their inclusion would have been antidilutive.

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION - REPORTABLE SEGMENTS (Unaudited) (In thousands)
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Year Ended December 31, 2023:
Net sales		$	342,680			$	113,878			$	91,500			$	(4,756	)		$	-			$	543,302
Cost of goods sold			228,053				71,597				42,352				(2,247	)			-				339,755
Gross margin			114,627				42,281				49,148				(2,509	)			-				203,547
Selling and administrative expenses			88,225				38,209				39,682				(2,509	)			19,598				183,205
Other periodic pension cost			-				-				-				-				855				855
Add: Depreciation and amortization			6,744				3,925				2,942				-				384				13,995
Segment Adjusted EBITDA(1)		$	33,146			$	7,997			$	12,408			$	-			$	(20,069	)		$	33,482
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Year Ended December 31, 2022:
Net sales		$	387,931			$	113,321			$	84,218			$	(6,639	)		$	-			$	578,831
Cost of goods sold			273,134				80,719				34,439				(2,820	)			-				385,472
Gross margin			114,797				32,602				49,779				(3,819	)			-				193,359
Selling and administrative expenses			90,118				39,295				33,631				(3,819	)			17,095				176,320
Other periodic pension cost			-				-				-				-				2,116				2,116
Add: Depreciation and amortization			6,465				3,946				2,373				-				220				13,004
Segment Adjusted EBITDA(1)		$	31,144			$	(2,747	)		$	18,521			$	-			$	(18,991	)		$	27,927
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Three Months Ended December 31, 2023:
Net sales		$	97,725			$	28,003			$	22,565			$	(1,052	)		$	-			$	147,241
Cost of goods sold			63,561				17,725				10,807				(497	)			-				91,596
Gross margin			34,164				10,278				11,758				(555	)			-				55,645
Selling and administrative expenses			24,392				9,748				10,180				(555	)			5,433				49,198
Other periodic pension cost			-				-				-				-				213				213
Add: Depreciation and amortization			1,918				911				732				-				103				3,664
Segment Adjusted EBITDA(1)		$	11,690			$	1,441			$	2,310			$	-			$	(5,543	)		$	9,898
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Three Months Ended December 31, 2022:
Net sales		$	102,040			$	26,426			$	21,415			$	(1,268	)		$	-			$	148,613
Cost of goods sold			70,712				24,653				9,001				(561	)			-				103,805
Gross margin			31,328				1,773				12,414				(707	)			-				44,808
Selling and administrative expenses			22,300				9,246				9,337				(707	)			4,146				44,322
Other periodic pension cost			-				-				-				-				532				532
Add: Depreciation and amortization			1,769				1,004				676				-				51				3,500
Segment Adjusted EBITDA(1)		$	10,797			$	(6,469	)		$	3,753			$	-			$	(4,627	)		$	3,454

(1) Segment Adjusted EBITDA is our primary measure of segment profitability under U.S. GAAP ASC 280 “Segment Reporting”. Amounts included in income (loss) before income tax expense and excluded from Segment Adjusted EBITDA include: interest expense, depreciation and amortization expense, impairment charges and the other items not tied to the operational performance of the segment. Total Segment Adjusted EBITDA is a non-GAAP financial measure. Please see reconciliation of Adjusted EBITDA included in the Non-GAAP Financial Measures table above.