– Total Sales Increased 13% Over Prior Year Quarter to $148 Million –
– Sales Growth in Branded Products of 29% and Contact Center Sales of 37% –
– Healthcare Apparel Sales Were $26 Million Versus $37 Million Prior Year Quarter –
– Net Loss was ($26.7) Million Versus $6.4 Million Prior Year Quarter, Including One-time Non-cash After-tax Charges of $28 Million and $4.5 Million, respectively –
SEMINOLE, Fla., Aug. 08, 2022 (GLOBE NEWSWIRE) -- Superior Group of Companies, Inc. (NASDAQ: SGC) (the “Company”) today announced its second quarter operating results for 2022.
The Company announced that for the second quarter ended June 30, 2022, net sales increased 13.1% to $147.9 million, compared to second quarter 2021 net sales of $130.8 million. Pretax loss was ($29.0) million in the second quarter of 2022 compared to pretax income of $5.5 million in the second quarter of 2021. Net loss was ($26.7) million or ($1.70) per diluted share for the second quarter of 2022 compared to net income of $6.4 million, or $0.40 per diluted share for the second quarter of 2021.
In the second quarter of 2022, the Company recognized pre-tax, non-cash impairment charges related to goodwill of $24.5 million ($23.6 million net of tax, or $1.50 per diluted share) and tradenames of $5.6 million ($4.4 million net of tax, or $0.28 per diluted share). In the second quarter of 2021, the Company recognized a pre-tax, non-cash settlement charge related to the termination of its defined benefit pension plans of $6.9 million ($4.5 million net of tax, or $0.28 per diluted share).
On an adjusted basis, which excludes the above charges in 2022 and 2021, net income was $1.3 million or $0.08 per diluted share for the second quarter of 2022 compared to net income of $10.9 million, or $0.68 per diluted share for the second quarter of 2021. At the conclusion of this press release is a reconciliation of reported-to-adjusted results, including a description of the significant items.
During the second quarter, the Company began the transition of key leadership positions as previously communicated with the addition of Catherine Beldotti Donlan, President of Healthcare Apparel and Mike Koempel, Chief Financial Officer. The transition has been seamless with the support of Peter Benstock serving as a healthcare apparel advisor and Andy Demott, former Chief Financial Officer, continuing to serve as Chief Operating Officer. The Company also added management expertise in supply chain, distribution and division management to support its long-term growth objectives.
“In order to further position for growth, we re-aligned the Company along three business segments: Healthcare Apparel, Branded Products and Contact Centers,” said Michael Benstock, Chief Executive Officer of the Company. “This re-alignment enables a more singular focus on healthcare, the ability to capitalize on synergies across all branded product offerings and a continued focus on driving significant growth in our contact centers. Overall, while we were pleased with our revenue growth this quarter, we recognize the ever-evolving macro environment and emerging challenges of rising interest rates and historic levels of inflation. As a result, we are taking a disciplined and prudent approach to cash management and have begun to implement cost initiatives of at least $8 million in annualized savings, while still maintaining our focus on consistent sales growth.”
CONFERENCE CALL
Superior Group of Companies will hold a conference call later today, August 8, 2022 at 5:00 p.m. Eastern Time to discuss the Company’s results. Interested investors 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 6:00 p.m. Eastern Time on August 22, 2022. 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 7715703 for all 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) 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, hotel, 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 cotton and other manufacturing 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, 2021 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and June 30, 2022. 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)
Superior Group of Companies™, 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. 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:
Investor Relations
investors@superiorgroupofcompanies.com
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, | ||||||||
| 2022 | 2021 | |||||||
| Net sales | $ | 147,933 | $ | 130,787 | ||||
| Costs and expenses: | ||||||||
| Cost of goods sold | 99,800 | 83,629 | ||||||
| Selling and administrative expenses | 45,969 | 33,906 | ||||||
| Goodwill impairment charge | 24,458 | - | ||||||
| Intangible assets impairment charge | 5,581 | - | ||||||
| Other periodic pension costs | 528 | 440 | ||||||
| Pension plan termination charge | - | 6,945 | ||||||
| Interest expense | 583 | 330 | ||||||
| 176,919 | 125,250 | |||||||
| Income (loss) before taxes on income | (28,986 | ) | 5,537 | |||||
| Income tax benefit | (2,311 | ) | (840 | ) | ||||
| Net income (loss) | $ | (26,675 | ) | $ | 6,377 | |||
| Net income (loss) per share: | ||||||||
| Basic | $ | (1.70 | ) | $ | 0.41 | |||
| Diluted | $ | (1.70 | ) | $ | 0.40 | |||
| Weighted average shares outstanding during the period: | ||||||||
| Basic | 15,732,264 | 15,433,412 | ||||||
| Diluted | 15,732,264 | 16,087,736 | ||||||
| Cash dividends per common share | $ | 0.14 | $ | 0.12 | ||||
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share and per share data) | ||||||||
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Net sales | $ | 291,515 | $ | 271,634 | ||||
| Costs and expenses: | ||||||||
| Cost of goods sold | 193,601 | 175,433 | ||||||
| Selling and administrative expenses | 88,183 | 69,017 | ||||||
| Goodwill impairment charge | 24,458 | - | ||||||
| Intangible assets impairment charge | 5,581 | - | ||||||
| Other periodic pension costs | 1,056 | 869 | ||||||
| Pension plan termination charge | - | 6,945 | ||||||
| Interest expense | 882 | 605 | ||||||
| 313,761 | 252,869 | |||||||
| Income (loss) before taxes on income | (22,246 | ) | 18,765 | |||||
| Income tax expense (benefit) | (801 | ) | 1,910 | |||||
| Net income (loss) | $ | (21,445 | ) | $ | 16,855 | |||
| Net income (loss) per share: | ||||||||
| Basic | $ | (1.37 | ) | $ | 1.10 | |||
| Diluted | $ | (1.37 | ) | $ | 1.05 | |||
| Weighted average shares outstanding during the period: | ||||||||
| Basic | 15,705,646 | 15,327,374 | ||||||
| Diluted | 15,705,646 | 16,039,605 | ||||||
| Cash dividends per common share | $ | 0.26 | $ | 0.22 | ||||
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share and par value data) | ||||||||
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 10,305 | $ | 8,935 | ||||
| Accounts receivable, less allowance for doubtful accounts of $7,248 and $6,393, respectively | 110,375 | 107,053 | ||||||
| Accounts receivable - other | 4,217 | 5,546 | ||||||
| Inventories | 127,036 | 120,555 | ||||||
| Contract assets | 46,088 | 38,018 | ||||||
| Prepaid expenses and other current assets | 20,367 | 19,162 | ||||||
| Total current assets | 318,388 | 299,269 | ||||||
| Property, plant and equipment, net | 52,970 | 49,690 | ||||||
| Operating lease right-of-use assets | 9,513 | 8,246 | ||||||
| Deferred tax asset | 1,440 | - | ||||||
| Intangible assets, net | 58,429 | 60,420 | ||||||
| Goodwill | 21,587 | 39,434 | ||||||
| Other assets | 11,353 | 13,186 | ||||||
| Total assets | $ | 473,680 | $ | 470,245 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 48,569 | $ | 52,340 | ||||
| Other current liabilities | 40,630 | 38,989 | ||||||
| Current portion of long-term debt | 15,286 | 15,286 | ||||||
| Current portion of acquisition-related contingent liabilities | 1,304 | 4,507 | ||||||
| Total current liabilities | 105,789 | 111,122 | ||||||
| Long-term debt | 133,407 | 100,845 | ||||||
| Long-term pension liability | 15,679 | 15,420 | ||||||
| Long-term acquisition-related contingent liabilities | 2,754 | 2,569 | ||||||
| Long-term operating lease liabilities | 4,495 | 3,729 | ||||||
| Deferred tax liability | - | 359 | ||||||
| Other long-term liabilities | 8,411 | 9,211 | ||||||
| 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 16,318,059 and 16,127,505 shares, respectively | 16 | 16 | ||||||
| Additional paid-in capital | 70,629 | 69,351 | ||||||
| Retained earnings | 137,986 | 163,836 | ||||||
| Accumulated other comprehensive income (loss), net of tax: | ||||||||
| Pensions | (3,939 | ) | (4,577 | ) | ||||
| Cash flow hedges | 37 | 47 | ||||||
| Foreign currency translation adjustment | (1,584 | ) | (1,683 | ) | ||||
| Total shareholders’ equity | 203,145 | 226,990 | ||||||
| Total liabilities and shareholders’ equity | $ | 473,680 | $ | 470,245 | ||||
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | ||||||||
| Six Months Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (21,445 | ) | $ | 16,855 | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 6,103 | 4,373 | ||||||
| Goodwill impairment charge | 24,458 | - | ||||||
| Intangible assets impairment charge | 5,581 | - | ||||||
| Inventory write-downs | 4,795 | 924 | ||||||
| Provision for bad debts - accounts receivable | 1,282 | 1,244 | ||||||
| Share-based compensation expense | 2,454 | 1,669 | ||||||
| Deferred income tax benefit | (2,018 | ) | (2,926 | ) | ||||
| Change in fair value of acquisition-related contingent liabilities | 626 | 1,741 | ||||||
| Pension plan termination charge | - | 6,945 | ||||||
| Changes in assets and liabilities, net of acquisition of businesses: | ||||||||
| Accounts receivable | (3,025 | ) | (896 | ) | ||||
| Accounts receivable - other | 458 | (1,392 | ) | |||||
| Contract assets | (8,176 | ) | (1,868 | ) | ||||
| Inventories | (9,377 | ) | (9,662 | ) | ||||
| Prepaid expenses and other current assets | (925 | ) | (2,565 | ) | ||||
| Other assets | 1,812 | (1,401 | ) | |||||
| Accounts payable and other current liabilities | (7,325 | ) | (14,535 | ) | ||||
| Payment of acquisition-related contingent liabilities | (3,346 | ) | (4,220 | ) | ||||
| Long-term pension liability | 1,116 | 384 | ||||||
| Other long-term liabilities | (693 | ) | 2,320 | |||||
| Net cash used in operating activities | (7,645 | ) | (3,010 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Additions to property, plant and equipment | (7,039 | ) | (11,326 | ) | ||||
| Acquisition of businesses | (11,202 | ) | (6,026 | ) | ||||
| Net cash used in investing activities | (18,241 | ) | (17,352 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from borrowings of debt | 117,790 | 127,574 | ||||||
| Repayment of debt | (85,299 | ) | (101,801 | ) | ||||
| Payment of cash dividends | (4,171 | ) | (3,437 | ) | ||||
| Payment of acquisition-related contingent liabilities | (1,416 | ) | (1,641 | ) | ||||
| Proceeds received on exercise of stock options | 495 | 2,122 | ||||||
| Tax withholdings on vesting of restricted shares and performance based shares | (232 | ) | (405 | ) | ||||
| Tax benefit from vesting of acquisition-related restricted stock | - | 171 | ||||||
| Net cash provided by financing activities | 27,167 | 22,583 | ||||||
| Effect of currency exchange rates on cash | 89 | 137 | ||||||
| Net increase in cash and cash equivalents | 1,370 | 2,358 | ||||||
| Cash and cash equivalents balance, beginning of period | 8,935 | 5,172 | ||||||
| Cash and cash equivalents balance, end of period | $ | 10,305 | $ | 7,530 | ||||
| SUPERIOR GROUP OF COMPANIES, INC. AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except share and par value data) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income (loss) | $ | (26,675 | ) | $ | 6,377 | $ | (21,445 | ) | $ | 16,855 | ||||||
| Adjustment for items: | ||||||||||||||||
| Goodwill impairment charge | 24,458 | - | 24,458 | - | ||||||||||||
| Intangible assets impairment charge | 5,581 | - | 5,581 | - | ||||||||||||
| Pension plan termination charge | - | 6,945 | - | 6,945 | ||||||||||||
| Tax impact of adjustment | (2,040 | ) | (2,410 | ) | (2,040 | ) | (2,410 | ) | ||||||||
| Adjusted net income(1) | $ | 1,324 | $ | 10,912 | $ | 6,554 | $ | 21,390 | ||||||||
| Diluted net income (loss) per share | $ | (1.70 | ) | $ | 0.40 | $ | (1.37 | ) | $ | 1.05 | ||||||
| Adjustment for items, after-tax, per diluted share | 1.78 | 0.28 | 1.77 | 0.28 | ||||||||||||
| Diluted adjusted net income per share(1) | $ | 0.08 | $ | 0.68 | $ | 0.40 | $ | 1.33 | ||||||||
| Weighted average shares outstanding during the period: | ||||||||||||||||
| Diluted, as reported | 15,732,264 | 16,087,736 | 15,705,646 | 16,039,605 | ||||||||||||
| Diluted, as adjusted(2) | 16,223,433 | 16,087,736 | 16,194,351 | 16,039,605 | ||||||||||||
(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 impacts of impairment and pension plan termination charges. 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 impairment and pension plan termination charges that are not reflective of our core business.
(2) Diluted weighted average shares outstanding used to calculate diluted adjusted net income per share includes shares of common stock of 491,169 and 488,705 for the three and six months ended June 30, 2022, respectively. 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 their inclusion would have been antidilutive.
