Superior Group of Companies Reports Second Quarter 2024 Results

- Total net sales of $131.7 million up from $129.2 million in prior year second quarter -
- Net income of $0.6 million compared to $1.2 million in prior year second quarter -
- EBITDA of $5.6 million compared to $7.4 million in prior year second quarter -
- Board of Directors approves $0.14 per share quarterly dividend -
- Maintains full-year outlook -

ST. PETERSBURG, Fla., Aug. 06, 2024 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ: SGC) (the "Company"), today announced its second quarter 2024 results.

"We delivered a second consecutive quarter of revenue growth along with robust free cash flow, continuing our commitment to maintaining a strong financial position," said Michael Benstock, Chief Executive Officer. "While second quarter results were below our expectations, we are poised to generate stronger performance in the second half of the year and are maintaining our full-year outlook. In addition, the steps we're taking now will clearly benefit our growth and profitability over the long-term. I'm pleased that our Board has again approved our quarterly dividend, reflecting our shared confidence in the compelling opportunities ahead to further penetrate all three of the large and growing end markets we serve, which will ultimately benefit our efforts to further enhance long-term shareholder value."

Second Quarter Results

For the second quarter ended June 30, 2024, net sales increased 2.0% to $131.7 million, compared to second quarter 2023 net sales of $129.2 million. Pretax income was $0.7 million compared to $1.4 million in the second quarter of 2023. Net income was $0.6 million or $0.04 per diluted share compared to $1.2 million, or $0.08 per diluted share for the second quarter of 2023.

Third Quarter 2024 Dividend

The Board of Directors declared a quarterly dividend of $0.14 per share, payable August 30, 2024 to shareholders of record as of August 17, 2024.

2024 Full-Year Outlook

The Company is maintaining its full year 2024 sales outlook range of $563 million to $570 million, versus 2023 sales of $543 million, and maintaining its full-year earnings per diluted share forecast of $0.73 to $0.79 versus $0.54 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 August 20, 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 9654569 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 previously disclosed 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 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. 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:
[e-mail]

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 June 30,
		2024				2023
Net sales		$	131,736			$	129,162
Costs and expenses:
Cost of goods sold			80,981				81,566
Selling and administrative expenses			48,375				43,382
Other periodic pension costs			189				214
Interest expense			1,541				2,624
			131,086				127,786
Income before income tax expense			650				1,376
Income tax expense			50				163
Net income		$	600			$	1,213
Net income per share:
Basic		$	0.04			$	0.08
Diluted		$	0.04			$	0.08
Weighted average shares outstanding during the period:
Basic			16,221,073				15,987,007
Diluted			16,769,297				16,124,816
Cash dividends per common share		$	0.14			$	0.14

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except shares and per share data)
		Six Months Ended June 30,
		2024				2023
Net sales		$	270,578			$	259,935
Costs and expenses:
Cost of goods sold			164,506				165,231
Selling and administrative expenses			97,124				86,761
Other periodic pension costs			378				428
Interest expense			3,328				5,194
			265,336				257,614
Income before income tax expense			5,242				2,321
Income tax expense			730				220
Net income		$	4,512			$	2,101
Net income per share:
Basic		$	0.28			$	0.13
Diluted		$	0.27			$	0.13
Weighted average shares outstanding during the period:
Basic			16,124,553				15,935,001
Diluted			16,611,375				16,121,573
Cash dividends per common share		$	0.28			$	0.28

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except shares and par value data)
		June 30,				December 31,
		2024				2023
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	13,374			$	19,896
Accounts receivable, less allowance for doubtful accounts of $3,591 and $4,237, respectively			92,628				103,494
Inventories			93,031				98,067
Contract assets			53,027				48,715
Prepaid expenses and other current assets			10,197				9,188
Total current assets			262,257				279,360
Property, plant and equipment, net			44,267				46,890
Operating lease right-of-use assets			16,774				17,909
Deferred tax asset			12,341				12,356
Intangible assets, net			49,125				51,160
Other assets			15,558				14,775
Total assets		$	400,322			$	422,450
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	46,949			$	50,520
Other current liabilities			39,336				43,978
Current portion of long-term debt			5,625				4,688
Current portion of acquisition-related contingent liabilities			1,026				1,403
Total current liabilities			92,936				100,589
Long-term debt			72,100				88,789
Long-term pension liability			13,439				13,284
Long-term acquisition-related contingent liabilities			673				557
Long-term operating lease liabilities			11,655				12,809
Other long-term liabilities			8,609				8,784
Total liabilities			199,412				224,812
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 16,792,577 and 16,564,712 shares, respectively			16				16
Additional paid-in capital			82,759				77,443
Retained earnings			122,106				122,464
Accumulated other comprehensive loss, net of tax:
Pensions			(1,077	)			(1,122	)
Foreign currency translation adjustment			(2,894	)			(1,163	)
Total shareholders' equity			200,910				197,638
Total liabilities and shareholders' equity		$	400,322			$	422,450

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
		Six Months Ended June 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	4,512			$	2,101
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,620				6,816
Inventory write-downs			888				144
Provision for bad debts - accounts receivable			(383	)			(628	)
Share-based compensation expense			1,620				2,420
Change in fair value of acquisition-related contingent liabilities			296				(733	)
Change in fair value of written put options			653				(145	)
Changes in assets and liabilities:
Accounts receivable			10,578				8,854
Contract assets			(4,526	)			5,447
Inventories			3,936				10,555
Prepaid expenses and other current assets			(1,309	)			2,747
Other assets			(639	)			(1,468	)
Accounts payable and other current liabilities			(6,424	)			1,280
Long-term pension liability			217				379
Other long-term liabilities			261				326
Net cash provided by operating activities			16,300				38,095
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment			(1,974	)			(3,643	)
Net cash used in investing activities			(1,974	)			(3,643	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings of debt			10,000				1,000
Repayment of debt			(25,875	)			(29,875	)
Debt issuance costs			-				(300	)
Payment of cash dividends			(4,657	)			(4,590	)
Payment of acquisition-related contingent liabilities			(557	)			-
Proceeds received on exercise of stock options			1,076				43
Net cash used in financing activities			(20,013	)			(33,722	)
Effect of currency exchange rates on cash			(835	)			297
Net increase (decrease) in cash and cash equivalents			(6,522	)			1,027
Cash and cash equivalents balance, beginning of period			19,896				17,722
Cash and cash equivalents balance, end of period		$	13,374			$	18,749

SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except shares and per share data)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net income		$	600			$	1,213			$	4,512			$	2,101
Interest expense			1,541				2,624				3,328				5,194
Income tax expense			50				163				730				220
Depreciation and amortization			3,368				3,428				6,620				6,816
EBITDA(1)		$	5,559			$	7,428			$	15,190			$	14,331
EBITDA margin(1)			4.2	%			5.8	%			5.6	%			5.5	%

(1) EBITDA, which is a non-GAAP financial measure, is defined as net income excluding interest expense, income tax expense and depreciation and amortization expense. EBITDA margin is defined as EBITDA divided by net sales. The Company believes 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 and (iii) asset base (depreciation and amortization). The Company uses EBITDA internally to monitor operating results and to evaluate the performance of its business. In addition, the compensation committee has used EBITDA in evaluating certain components of executive compensation, including performance-based annual incentive programs. EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as an alternative to net income, cash flows from operating activities or any other measure determined in accordance with GAAP. The items excluded to calculate EBITDA are significant components in understanding and assessing the Company's results of operations. The presentation of the Company's 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 EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.

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 Three Months Ended June 30, 2024:
Net sales		$	81,296			$	26,592			$	24,832			$	(984	)		$	-			$	131,736
Cost of goods sold			53,170				16,392				11,871				(452	)			-				80,981
Gross margin			28,126				10,200				12,961				(532	)			-				50,755
Selling and administrative expenses			22,969				9,879				10,533				(532	)			5,526				48,375
Other periodic pension cost			-				-				-				-				189				189
Add: Depreciation and amortization			1,567				956				753				-				92				3,368
Segment EBITDA(1)		$	6,724			$	1,277			$	3,181			$	-			$	(5,623	)		$	5,559
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Three Months Ended June 30, 2023:
Net sales		$	79,592			$	28,072			$	22,758			$	(1,260	)		$	-			$	129,162
Cost of goods sold			53,952				17,653				10,554				(593	)			-				81,566
Gross margin			25,640				10,419				12,204				(667	)			-				47,596
Selling and administrative expenses			20,362				9,466				9,614				(667	)			4,607				43,382
Other periodic pension cost			-				-				-				-				214				214
Add: Depreciation and amortization			1,710				976				662				-				80				3,428
Segment EBITDA(1)		$	6,988			$	1,929			$	3,252			$	-			$	(4,741	)		$	7,428
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Six Months Ended June 30, 2024:
Net sales		$	168,364			$	55,829			$	48,384			$	(1,999	)		$	-			$	270,578
Cost of goods sold			108,497				34,119				22,779				(889	)			-				164,506
Gross margin			59,867				21,710				25,605				(1,110	)			-				106,072
Selling and administrative expenses			46,263				19,691				20,954				(1,110	)			11,326				97,124
Other periodic pension cost			-				-				-				-				378				378
Add: Depreciation and amortization			3,067				1,893				1,476				-				184				6,620
Segment EBITDA(1)		$	16,671			$	3,912			$	6,127			$	-			$	(11,520	)		$	15,190
		Branded Products				Healthcare Apparel				Contact Centers				Intersegment Eliminations				Other				Total
For the Six Months Ended June 30, 2023:
Net sales		$	161,443			$	56,226			$	44,814			$	(2,548	)		$	-			$	259,935
Cost of goods sold			109,904				35,707				20,821				(1,201	)			-				165,231
Gross margin			51,539				20,519				23,993				(1,347	)			-				94,704
Selling and administrative expenses			40,415				18,968				19,278				(1,347	)			9,447				86,761
Other periodic pension cost			-				-				-				-				428				428
Add: Depreciation and amortization			3,374				1,950				1,330				-				162				6,816
Segment EBITDA(1)		$	14,498			$	3,501			$	6,045			$	-			$	(9,713	)		$	14,331

(1) Segment EBITDA is our primary measure of segment profitability under U.S. GAAP ASC 280 "Segment Reporting". Amounts included in income before income tax expense and excluded from Segment EBITDA include: interest expense and depreciation and amortization expense. Total Segment EBITDA is a non-GAAP financial measure. Please see reconciliation of EBITDA included in the Non-GAAP Financial Measures table above.